Abstract
Low levels of economic development constrain fiscal and monetary policy in several ways. Few developing countries are able to raise much direct tax revenue, and so must rely on other sources of funding, including seigniorage. Institutional constraints often lead to a high risk of hyperinflation and currency crises. Credible, effective institutions can be created with appropriate outside help, but there are few examples of this in practice.
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Fielding, D. (2018). Fiscal and Monetary Policies in Developing Countries. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_347
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DOI: https://doi.org/10.1057/978-1-349-95189-5_347
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