Research Paper No. 3: Monetary Deficit and Inflation

This research paper investigates the relationship between monetary deficit and inflation in Haiti from 1986 to 2015. It employs a vector autoregressive (VAR) model to analyze the impact of monetary policy on inflation. The study considers the role of budgetary dominance and uses credit to the state as a proxy for monetary financing of the deficit. The findings suggest that past credit developments do not directly influence inflation, but lagged monetary financing affects the money supply, which in turn impacts inflation in the short and medium term, supporting the Wallace and Sargent hypothesis.