Jonathan Marie

Hyperinflation in a small open economy with a fixed exchange rate: A post Keynesian view

ABSTRACT This paper examines the emergence of hyperinflation in a small open economy with a fixed exchange rate from a post Keynesian perspective. Three variables play key roles: distributive conflict, external debt, and expectations about the exchange rate. First, we propose a short-run Kaleckian macro model. Then, we study the long-run behavior of the model by endogenizing the price level and foreign indebtedness. We conclude that the existence of expectations about the nominal exchange rate is crucial to explaining the emergence of hyperinflation.

Inflation in Argentina during the Second Peronist Period (1973–76): A Post-Keynesian Interpretation

This paper uses the Post-Keynesian approach to examine the surge of inflation in Argentina between 1973 and 1976. The pattern of inflation is compared with the changing course of the distributional conflict that characterised the episode. A description of the prevailing political and social context provides insight into Argentinas macroeconomic evolution. Two sub-periods are identified: one from June 1973 to October 1974 characterised mainly by a slowdown in inflation and an upturn in economic growth; a second, ending in the first quarter of 1976, during which the distributional conflict flared up again partly because of the rise in import prices and partly because the firms and workers involved enjoyed substantial market power and bargaining power. This led to an escalation of inflation and great variability in macroeconomic circumstances.

Why Are Keynesian Multipliers Larger in Hard Times? A Palley-Aftalion-Pasinetti Explanation

We use the Annual Macroeconomic database of the European Commission (AMECO) to confirm that textbook multipliers are nearly always greater than one and that they increase during recessions. Propensity to import falls in recessions through the combined effects of the amplified fall in investment and the high import content of investment. A change in saving behavior may also raise the multiplier. These findings strongly support the need for countercyclical fiscal policies during recessions.

Bulgaria’s hyperinflation in 1997: transition, banking fragility and foreign exchange

Abstract This article has two objectives: to study the 1997 episode of hyperinflation in Bulgaria, and to compare and contrast this analysis with the post-Keynesian theoretical approach. This approach highlights the role of three components observed simultaneously in order to understand the emergence of hyperinflation: a virulent distributive conflict; the presence of indexing mechanisms; and finally, flight from domestic currency into one or more foreign currencies. The article reveals that a transitional economy like that of Bulgaria in the 1990s may generate hyperinflation in the absence of any violent distribution conflict: the transition and the banking crisis engender inflation. The foreign exchange rate is decisive in the emergence of hyperinflationary dynamics (and therefore mistrust of domestic currency). This interpretation of hyperinflation is confirmed by an econometric analysis.