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Food Subsidies and Inflation in Developing Countries: A Bridge Between Structuralism and Monetarism.

Abstract:

This paper examines the efficacy of food consumption subsidies as anti-inflation policy in developing countries characterized by rigidities of food supply. First a standard structuralist model is utilized to show that though a policy of food consumption subsidies brings down inflation in the very short run, eventually it is self-defeating: a lower relative price of food encourages demand for scarce food and exacerbates inflationary pressures. Next, a monetarist feature, the asset creation eff...

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Volume:
334
Publication date:
1989-01-01
URN:
uuid:4b52d5b1-3855-438c-bdd7-b13277e73589
Local pid:
oai:economics.ouls.ox.ac.uk:11633
Language:
English

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