01672cas a2200241 a 4500 AALejournalIMF007481 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451846072 1018-5941 BD-DhAAL BD-DhAAL Cardoso, Eliane. Virtual Deficits and the Patinkin Effect / Eliane Cardoso. Washington, D.C. : International Monetary Fund, 1998. 1 online resource (40 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper develops a model of inflationary finance that defines the fiscal deficit as a function of the virtual deficit-a deficit that would be observed if inflation were zero. It studies the negative relationship between the inflation rate and real government expenditures-the Patinkin effect. The model outperforms others in explaining four-digit inflation rates that never explode into hyperinflation. It also explains how apparently expansionist fiscal policies end in real deficits that are small and compatible with the small amount of seigniorage that can be collected at high inflation rates. Finally, it applies the model to the case of Brazil. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1998/041 Full text available on IMF http://elibrary.imf.org/view/journals/001/1998/041/001.1998.issue-041-en.xml IMF e-Library