Bhattacharya, Joydeep; Guzman, Mark G.; Smith, Bruce D. - Department of Economics, Iowa State University - 1998
Does monetizing a deficit result in a higher or a lower rate of inflation than does bond financing the same deficit? Sargent and Wallace (1981) produced conditions under which bond finance leads to a higher rate of inflation than deficit monetization ("unpleasant monetarist arithmetic'')....