Postconflict Monetary Reconstruction
During civil wars governments typically resort to inflation to raise revenue. A model of this phenomenon is presented, estimated, and applied to the choices and constraints faced during the postconflict period. The results show that far from there being a fiscal peace dividend, postconflict governments tend to face even more pressing needs after than during war. As a result, in the absence of postconflict aid, inflation increases sharply, frustrating a more general monetary recovery. Aid decisively transforms the path of monetary variables in the postconflict period, enabling the economy to regain peacetime characteristics. Postconflict aid thus achieves a monetary "reconstruction" analogous to its more evident role in infrastructure.
Main Authors: | , , |
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Format: | Journal Article biblioteca |
Published: |
World Bank
2008-01-30
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Subjects: | asset substitution, assets, capital flight, discount rate, inflation, monetary policy, money demand, rate of inflation, seigniorage, seigniorage revenue, |
Online Access: | http://hdl.handle.net/10986/4473 |
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