Fabrizio Coricelli
Winter, 1995
Department of Economics

Course Description

I. Stabilizing high inflation

Lecture 1

1. Sources and models of inflation
1.1. Cagan's model
1.1.1. Budget deficit, seignorage and inflation
1.1.2. Dynamics of inflation and expectations
Readings: M. Bruno

Lecture 2

2. Chronic versus hyper-inflation
2.1. Sargent view on stopping high inflation
2.2.Expectations, credibility (Introduction to the topic)
Readings: T. Sargent, and J.Sachs

Lecture 3

3. Different models of stabilization
3.1. Issue of the nominal anchors
3.1.1. Exchange-rate based versus money-based stabilization's
3.1.2 Credibility and output response to stabilization programs
Readings: C. Vegh

Lecture 4

4. Inflation and its stabilization: A synthesis
4.1. Fiscal policy, supply shocks, incomes policy
Readings: L. Ball

II. Stabilization programs supported by the International Monetary Fund

Lecture 5

1. The conceptual underpinnings to IMF programs: The monetary approach to the balance of payments (brief discussion)
2. The neo-structuralist critique

III. Stabilization programs in economies in transition

Lecture 6

1. Effects of stabilization in economies with underdeveloped financial markets
1.1. Imperfection in credit markets: modifying the IS-LM model
Readings: Bernanke and Blinder

Lecture 7

1.2. A simple model of liquidity constrained firms
Readings: Calvo and Coricelli (1992)

Lecture 8

2. The development of dysfunctional financial markets: The case of inter-enterprise arrears
Readings: Calvo and Coricelli (1994)

CRC-Curriculum Resource Center
CEU Budapest, Hungary
Modified: May, 1996


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