Fighting high inflation: challenges to conflicting claims in a dependent economy framework

This paper contributes to the existing literature on high inflation stabilization policies. Even though recently some Post Keynesian authors have addressed the causes of moderate, high, and even hyperinflation, there is still room to discuss stabilization policies. Our model builds on Post Keynesian conflicting-claims models, but we also account for internal and external challenges in inflation stabilizations. We confirmed that external sustainability is crucial for a successful disinflation program based on the nominal exchange rate anchor without output and income distribution costs. However, reconciling social demands and macroeconomic stability to solve high inflation is another divine coincidence.