<p>Okay, unfortunately the term &quot;hyperinflation&quot; has been thrown around by people like Peter Schiff just far too often, and as a result it has been oversimplified.</p>
<p>One of the questions you are asking is, why did Zimbabwe experience it and Weimar, etcetera. Imagine we are working on a master thesis and you are being told the topic you want to cover is way too broad, that's what's going on here.</p>
<p>Let's focus on the question, why has hyperinflation not happened in the United States after so much quantitative easing? That's what you are asking and again unfortunately this question, I have to be believe is being prompted because of what people like Peter Schiff go on shrieking all the time on television, again over simplifying the topic.</p>
<p>I think it's important that we learn about the Bretton Woods system and you can learn a bit about it here:
<a href="https://www.economist.com/the-economist-explains/2014/06/30/what-was-decided-at-the-bretton-woods-summit" rel="nofollow noreferrer">https://www.economist.com/the-economist-explains/2014/06/30/what-was-decided-at-the-bretton-woods-summit</a></p>
<p>From that meeting, it was decided that the U.S. dollar would become the world's reserve currency. In propping the U.S. dollar as the world's reserve currency, it created a system where every nation on the planet had to settle its international trade in the reserve currency, so every nation who engages in international trade has to have a certain amount in U.S. dollars in reserve.</p>
<p>This created what called Triffin's Paradox.</p>
<p>The core of Triffin's Paradox is that the issuer of a reserve currency must serve two entirely different sets of users: the domestic economy, and the international economy, but you will not be able to make both sets of users happy.</p>
<p>So our Federal Reserve needs to print USD to meet global demand for US dollars, but this money printing can lead to the devaluation of the currency which hurts the people of the issuing country by losing purchasing power, but does help foreign governments to be able to make their debt payments in USDs and certainly the people of these other nations like to stockpile USD in case their local currency goes kaput.</p>
<p>So the question becomes why did this not cause hyperinflation at home in the United States?</p>
<p>The grossly oversimplified answer would be, it did not print enough money in the world for the dollar to lose its value, if we agree on the premise that what is valuable is what is scarce, despite hearing billions of dollars printed, it still do not satisfy the whole planet, so its still scarce, still hold value.</p>
<p>So hyperinflation did not happen because the Federal Reserve was not printing up paper dollars and passing it out on the street, but rather meeting the liquidity needs of commercial banks and other central banks and institutions. That in itself was never going to cause hyperinflation.</p>
<p>Hyperinflation may happen if and when the Federal Reserve decides to start issuing money directly to the public. Why? Because now you have excess amount of paper in the hands of consumers who are going to be chasing the same scarce goods.</p>

CC BY-SA 4.0
2021-09-25T05:39:11.893Z
2021-09-25T05:39:11.893Z
Daniel
<p>As you have been already answered on therms of the quantitative equation of money, I will give you others approachs between the realtionship of these ways of funding and real variables.</p>
<p>First, more printed money lead to more assets and therefore more demand coming as effect of this new financial wealth, that could lead to inflation as well, depending on the real supply.</p>
<p>Also, the inflation could come from the depreciation of US dollar caused by increasing it's supply or from another perspective, the increase on the supply of money implies* lower rate of interest, that could imply a lower exchange rate as capitals tend to go out looking for better interest rate. The lower rate of exchange on dollar leads to more expensive imports and hence an increase on inflation rate. Lower interest and rate of exchange could boost the demand as there exist the posibility of lead to an increase on real invest or on exports (Note that there's no certainty because there's other variables involved.</p>
<p>The effects over inflation coming from the increase of the demand depends on the size of the output gap.</p>
<p>*If there isn't an sterilization policy.</p>

CC BY-SA 4.0
2021-09-25T22:46:57.183Z
2021-09-25T22:46:57.183Z
DPedro
<p>This question is full of misconceptions, I think those have to be corrected first.</p>
<hr />
<p><strong>Correcting Misconceptions:</strong></p>
<ol>
<li>
<blockquote>
<p>Unlike a normal company, the government can't simply go to the bank and ask to borrow existing money from the bank, rather (it is my understanding) that the government goes to the treasury and asks for more money to be printed so that the government can borrow from the treasury, to which the treasury always responds yes.</p>
</blockquote>
</li>
</ol>
<p>No. First US treasury is literally part of the <a href="https://en.wikipedia.org/wiki/United_States_federal_executive_departments" rel="nofollow noreferrer">executive branch</a> of the US government - thus US treasury <em>is</em> the government even in the most strictest and narrow sense of the word. Second, printing in US is done by  Bureau of Engraving and Printing, which is overseen by the treasury but it is not the treasury, and minting is done by US mint. Third, US government can borrow money from bank or to be precise from a central bank, in the US that would be the Federal Reserve (Fed). That is actually where US is borrowing most of its covid stimulus money (as explained in this article by <a href="http://www.crfb.org/blogs/fed-buying-our-new-debt" rel="nofollow noreferrer">Committee for a Responsible Federal Budget</a>). Moreover, most of the money nowadays is not printed but it is created electronically by Fed - there is no meaningful economic difference between printing a note and creating an equivalent electronically but still its good to make that distinction to know where the money is coming from (i.e. not really from Bureau of Engraving and Printing but mostly from Fed).</p>
<ol start="2">
<li>
<blockquote>
<p>It makes sense to me that if America wanted to borrow money from China, the only money that it could borrow would be RMB, because the only money that China can print is RMB</p>
</blockquote>
</li>
</ol>
<p>No, if China wants to buy US government debt it has to do it in dollars. The way how it is done is that China first converts its RMB to US dollars on foreign exchange and then pays for US treasury bill in dollars. Of course, nowadays the sale might be set up in a way where everything is done in one step, but US debt is denominated in US dollars. When US government issues its debt it gets dollars and it promises to pay back dollars.</p>
<hr />
<p><strong>Answering the Main Question:</strong></p>
<blockquote>
<p>Why is it that when a government prints a ton of money, it causes inflation, rising of prices, and so on as in Zimbabwe many years ago, but when a government borrows the same amount of money from another country, it does not cause inflation at the same level?</p>
</blockquote>
<p>Because, while virtually all conventional economists agree that there is positive relationship between increase in money supply and inflation, the relationship is not proportional and there are multiple other variables that play a role.</p>
<p>The simplest model to describe money market equilibrium (which determines price level and thus inflation) is given by equation of exchange (See Mankiw Macroeconomics pp 87) as:</p>
<p><span class="math-container">$$MV=PY$$</span></p>
<p>Where <span class="math-container">$M$</span> is the money supply, <span class="math-container">$V$</span> velocity of money, <span class="math-container">$P$</span> price level and <span class="math-container">$Y$</span> output. Solving for price level and log-linearizing we get:</p>
<p><span class="math-container">$$\ln P=\ln M+\ln V−\ln Y$$</span></p>
<p>Thanks to the logs the above equation can be interpreted in terms of changes, hence for example if output <span class="math-container">$Y$</span> increases by <span class="math-container">$1\%$</span> price level would be expected to decrease by <span class="math-container">$1\%$</span> and so on. In turn changes in price level are by definition inflation (or deflation for negative changes) so setting up the equation this way allows us to directly talk about inflation.</p>
<p>The equation above showcases that its not only money supply that matters for determination of price level, but also output and more importantly velocity of money. It is actually the last one (velocity of money) that is argued to be culprit for why US is not experiencing much inflation and indeed you can see from the data that velocity of money in recent times in US dropped to its lowest levels it ever was (see the data provided by <a href="https://fred.stlouisfed.org/series/M2V" rel="nofollow noreferrer">Fed here</a>). The velocity just between end of 2019 and present dropped by over <span class="math-container">$35\%$</span>, meaning that even if money supply would increase by <span class="math-container">$35\%$</span> there would be no inflation given the model above.</p>
<p>Next, when I introduced the model above I mentioned it is most simple model (I did not wanted to overwhelm you by more complex model since you are clearly not an economist). In more complex models what matters is not just the variables above but also their expectations and how are people's expectations of inflation anchored (see Romer Advanced Macroeconomics for overview of more nuanced models). It is also being argued that peoples inflation expectations are low due to Fed pursuing policy of low inflation for very long time. The job of modern independent central bank was for very long time at least partially to maintain price stability which for long time meant fighting inflation so it is very hard for central bank to be credible when it tries to increase inflation.</p>
<p>Furthermore, the increase in money supply in US is nowhere near the amount that occurs in countries suffering hyperinflation. In the US the money supply (measured as M2) increased since last year by approximately <span class="math-container">$22.5\%$</span> according <a href="https://fred.stlouisfed.org/series/M2" rel="nofollow noreferrer">Fed data</a>, whereas for comparison in Venezuela that is experiencing hyperinflation the money supply expanded by about 753% (according to data by <a href="https://tradingeconomics.com/venezuela/money-supply-m2" rel="nofollow noreferrer">trading economics</a>). US is not even close to that mind boggling rate of money supply increase so there is no reason to even expect hyperinflation (which is typically inflation that is at least <span class="math-container">$50\%$</span> <em>per month</em>).</p>

CC BY-SA 4.0
2021-01-21T22:05:37.833Z
Thanks for the super-detailed answer!  I'm not American, so I misused the terms "treasury" and "fed", and when I used "printing money" in my question, I was implicitly acknowledging that there is no actual difference between the Mint/Bureau of Engraving and Printing actually physically printing bills and the Fed creating electronic money.
Ertai87
CC BY-SA 4.0
2021-01-21T22:07:30.713Z
As a secondary question, when you say that China has to buy US dollars on the open market so it can lend the money to the US, that seems reasonable, but are there actually trillions of dollars in ForEx markets that China (or whoever) can just buy up if they want to lend money to the US government?  Doesn't that money supply run out eventually (if the Fed doesn't continually "print" more and more money?  What happens then?
Ertai87
CC BY-SA 4.0
2021-01-21T22:11:10.853Z
@Ertai87 there is a finite amount of US dollars on forex market, but if there is shortage of US dollars then exchange rate (price for US dollars in another currency) will just increase - fundamentally its the same supply demand story as when there is shortage of bread - price increases so less people are willing to buy it. China will just find its more and more expensive to buy US debt until they stop. Of course, it’s also possible to create more US dollars continuously to keep exchange rate down but even in world with fixed money supply in principle this does not pose technical difficulties
1muflon1
CC BY-SA 4.0
2021-01-21T22:22:39.627Z
Thanks for the answer!  And this is getting off-topic so please let me know if I should ask this in another question, but: It's well-known that China is a currency manipulator, where they set the price for RMB in USD and index it to around 6:1 at all times.  But let's say there was a shortage of USD on the market such that sellers of USD would not accept China's 6:1 exchange rate, and they would want a premium above 6:1 (say, 10:1 or something).  Would that scenario in effect nullify China's ability to manipulate its currency?
Ertai87
CC BY-SA 4.0
2021-01-21T22:35:35.497Z
@Ertai87 even with current peg China has to behave in a way that people accept their exchange rate. That is well known Mundell-Fleming trillema - country can only have 2 out of following three policies: free capital mobility, fixed/managed exchange rate and monetary autonomy. So even presently China has to give up its monetary autonomy. If USD would become more scarce it would not change that - it would just make it more expensive for China to pursue that peg. They could still do that just by changes in their own money supply but at some point it it might not be economical for them to do so
1muflon1
CC BY-SA 4.0
2021-01-21T22:38:00.870Z
Thanks for the detailed help and explanation!  I don't like to accept answers before 24 hours as a general rule just in case a better one shows up, but I upvoted everything else for the time being :)
Ertai87
CC BY-SA 4.0
2021-01-21T22:38:24.400Z
@Ertai87 sure no problem take your time
1muflon1
CC BY-SA 4.0
2021-01-21T21:14:13.013Z
2021-01-21T21:31:05.127Z
2021-01-21T21:31:05.127Z
1muflon1
<p>When a country's government has a budget shortfall, that country has to find some way to pay its contractors/emplooyees.  Unlike a normal company, the government can't simply go to the bank and ask to borrow existing money from the bank, rather (it is my understanding) that the government goes to the treasury and asks for more money to be printed so that the government can borrow from the treasury, to which the treasury always responds yes.  In this case, when the government has a budget shortfall, new money is injected into the economy through the government to its contractors and employees to pay its bills; the contractors and employees have their own bills to pay and can't accept government IOUs to fund their own endeavours.</p>
<p>Now, with this injection of money into the system, and in particular as of recently with the US and many other countries injecting money via Covid stimulus, my question is to why this hyper-printing of money doesn't cause hyperinflation; when I go to the grocery store week-to-week, I don't notice the price of the items I buy meaningfully increasing over time as would be expected in a hyperinflation situation such as Zimbabwe many years ago.</p>
<p>My understanding (which is probably wrong) is that this has to do with the fact that the government is &quot;borrowing&quot; money from other governments.  To use China as an example, China's money is the Yuan/RMB.  It makes sense to me that if America wanted to borrow money from China, the only money that it could borrow would be RMB, because the only money that China can print is RMB (unless China happens to be sitting on an unending pile of USD to the tune of tens of trillions of dollars, which I find possible but highly unlikely).  However, RMB is not legal tender in the USA, and therefore the US government cannot pay its debts in RMB, in much the same way as they can't pay it in IOUs.  Somehow, the US government converts RMB into USD, and somehow they do this without causing hyperinflation of the USD by printing the money to execute the RMB conversion.</p>
<p>My question is: How does this all work?  Why is it that when a government prints a ton of money, it causes inflation, rising of prices, and so on as in Zimbabwe many years ago, but when a government borrows the same amount of money from another country, it does not cause inflation at the same level?</p>

<macroeconomics><inflation><money-supply><government-debt>
What is the difference between "borrowing" money and "printing" money?
Ertai87
# What is the difference between "borrowing" money and "printing" money?

(Asked by: username_0 on 2021-01-21)

When a country's government has a budget shortfall, that country has to find some way to pay its contractors/emplooyees. Unlike a normal company, the government can't simply go to the bank and ask to borrow existing money from the bank, rather (it is my understanding) that the government goes to the treasury and asks for more money to be printed so that the government can borrow from the treasury, to which the treasury always responds yes. In this case, when the government has a budget shortfall, new money is injected into the economy through the government to its contractors and employees to pay its bills; the contractors and employees have their own bills to pay and can't accept government IOUs to fund their own endeavours.

Now, with this injection of money into the system, and in particular as of recently with the US and many other countries injecting money via Covid stimulus, my question is to why this hyper-printing of money doesn't cause hyperinflation; when I go to the grocery store week-to-week, I don't notice the price of the items I buy meaningfully increasing over time as would be expected in a hyperinflation situation such as Zimbabwe many years ago.

My understanding (which is probably wrong) is that this has to do with the fact that the government is "borrowing" money from other governments. To use China as an example, China's money is the Yuan/RMB. It makes sense to me that if America wanted to borrow money from China, the only money that it could borrow would be RMB, because the only money that China can print is RMB (unless China happens to be sitting on an unending pile of USD to the tune of tens of trillions of dollars, which I find possible but highly unlikely). However, RMB is not legal tender in the USA, and therefore the US government cannot pay its debts in RMB, in much the same way as they can't pay it in IOUs. Somehow, the US government converts RMB into USD, and somehow they do this without causing hyperinflation of the USD by printing the money to execute the RMB conversion.

My question is: How does this all work? Why is it that when a government prints a ton of money, it causes inflation, rising of prices, and so on as in Zimbabwe many years ago, but when a government borrows the same amount of money from another country, it does not cause inflation at the same level?

**Tags:** macroeconomics, inflation, money-supply, government-debt


---

## 3 answers

### Answer by username_3 on 2021-01-21. Score: 3 | Accepted answer

This question is full of misconceptions, I think those have to be corrected first.

---

**Correcting Misconceptions:**

1. > Unlike a normal company, the government can't simply go to the bank and ask to borrow existing money from the bank, rather (it is my understanding) that the government goes to the treasury and asks for more money to be printed so that the government can borrow from the treasury, to which the treasury always responds yes.

No. First US treasury is literally part of the [executive branch](https://en.wikipedia.org/wiki/United_States_federal_executive_departments) of the US government - thus US treasury *is* the government even in the most strictest and narrow sense of the word. Second, printing in US is done by Bureau of Engraving and Printing, which is overseen by the treasury but it is not the treasury, and minting is done by US mint. Third, US government can borrow money from bank or to be precise from a central bank, in the US that would be the Federal Reserve (Fed). That is actually where US is borrowing most of its covid stimulus money (as explained in this article by [Committee for a Responsible Federal Budget](http://www.crfb.org/blogs/fed-buying-our-new-debt)). Moreover, most of the money nowadays is not printed but it is created electronically by Fed - there is no meaningful economic difference between printing a note and creating an equivalent electronically but still its good to make that distinction to know where the money is coming from (i.e. not really from Bureau of Engraving and Printing but mostly from Fed).

2. > It makes sense to me that if America wanted to borrow money from China, the only money that it could borrow would be RMB, because the only money that China can print is RMB

No, if China wants to buy US government debt it has to do it in dollars. The way how it is done is that China first converts its RMB to US dollars on foreign exchange and then pays for US treasury bill in dollars. Of course, nowadays the sale might be set up in a way where everything is done in one step, but US debt is denominated in US dollars. When US government issues its debt it gets dollars and it promises to pay back dollars.

---

**Answering the Main Question:**

> Why is it that when a government prints a ton of money, it causes inflation, rising of prices, and so on as in Zimbabwe many years ago, but when a government borrows the same amount of money from another country, it does not cause inflation at the same level?

Because, while virtually all conventional economists agree that there is positive relationship between increase in money supply and inflation, the relationship is not proportional and there are multiple other variables that play a role.

The simplest model to describe money market equilibrium (which determines price level and thus inflation) is given by equation of exchange (See Mankiw Macroeconomics pp 87) as:

$$MV=PY$$

Where $M$ is the money supply, $V$ velocity of money, $P$ price level and $Y$ output. Solving for price level and log-linearizing we get:

$$\ln P=\ln M+\ln V−\ln Y$$

Thanks to the logs the above equation can be interpreted in terms of changes, hence for example if output $Y$ increases by $1\%$ price level would be expected to decrease by $1\%$ and so on. In turn changes in price level are by definition inflation (or deflation for negative changes) so setting up the equation this way allows us to directly talk about inflation.

The equation above showcases that its not only money supply that matters for determination of price level, but also output and more importantly velocity of money. It is actually the last one (velocity of money) that is argued to be culprit for why US is not experiencing much inflation and indeed you can see from the data that velocity of money in recent times in US dropped to its lowest levels it ever was (see the data provided by [Fed here](https://fred.stlouisfed.org/series/M2V)). The velocity just between end of 2019 and present dropped by over $35\%$, meaning that even if money supply would increase by $35\%$ there would be no inflation given the model above.

Next, when I introduced the model above I mentioned it is most simple model (I did not wanted to overwhelm you by more complex model since you are clearly not an economist). In more complex models what matters is not just the variables above but also their expectations and how are people's expectations of inflation anchored (see Romer Advanced Macroeconomics for overview of more nuanced models). It is also being argued that peoples inflation expectations are low due to Fed pursuing policy of low inflation for very long time. The job of modern independent central bank was for very long time at least partially to maintain price stability which for long time meant fighting inflation so it is very hard for central bank to be credible when it tries to increase inflation.

Furthermore, the increase in money supply in US is nowhere near the amount that occurs in countries suffering hyperinflation. In the US the money supply (measured as M2) increased since last year by approximately $22.5\%$ according [Fed data](https://fred.stlouisfed.org/series/M2), whereas for comparison in Venezuela that is experiencing hyperinflation the money supply expanded by about 753% (according to data by [trading economics](https://tradingeconomics.com/venezuela/money-supply-m2)). US is not even close to that mind boggling rate of money supply increase so there is no reason to even expect hyperinflation (which is typically inflation that is at least $50\%$ *per month*).

> **Comments:**
> **username_0**: Thanks for the super-detailed answer!  I'm not American, so I misused the terms "treasury" and "fed", and when I used "printing money" in my question, I was implicitly acknowledging that there is no actual difference between the Mint/Bureau of Engraving and Printing actually physically printing bills and the Fed creating electronic money.  
> **username_0**: As a secondary question, when you say that China has to buy US dollars on the open market so it can lend the money to the US, that seems reasonable, but are there actually trillions of dollars in ForEx markets that China (or whoever) can just buy up if they want to lend money to the US government?  Doesn't that money supply run out eventually (if the Fed doesn't continually "print" more and more money?  What happens then?  
> **username_3**: @username_0 there is a finite amount of US dollars on forex market, but if there is shortage of US dollars then exchange rate (price for US dollars in another currency) will just increase - fundamentally its the same supply demand story as when there is shortage of bread - price increases so less people are willing to buy it. China will just find its more and more expensive to buy US debt until they stop. Of course, it’s also possible to create more US dollars continuously to keep exchange rate down but even in world with fixed money supply in principle this does not pose technical difficulties  
> **username_0**: Thanks for the answer!  And this is getting off-topic so please let me know if I should ask this in another question, but: It's well-known that China is a currency manipulator, where they set the price for RMB in USD and index it to around 6:1 at all times.  But let's say there was a shortage of USD on the market such that sellers of USD would not accept China's 6:1 exchange rate, and they would want a premium above 6:1 (say, 10:1 or something).  Would that scenario in effect nullify China's ability to manipulate its currency?  
> **username_3**: @username_0 even with current peg China has to behave in a way that people accept their exchange rate. That is well known Mundell-Fleming trillema - country can only have 2 out of following three policies: free capital mobility, fixed/managed exchange rate and monetary autonomy. So even presently China has to give up its monetary autonomy. If USD would become more scarce it would not change that - it would just make it more expensive for China to pursue that peg. They could still do that just by changes in their own money supply but at some point it it might not be economical for them to do so  
> **username_0**: Thanks for the detailed help and explanation!  I don't like to accept answers before 24 hours as a general rule just in case a better one shows up, but I upvoted everything else for the time being :)  
> **username_3**: @username_0 sure no problem take your time  

---

### Answer by username_1 on 2021-09-25. Score: 1

Okay, unfortunately the term "hyperinflation" has been thrown around by people like Peter Schiff just far too often, and as a result it has been oversimplified.

One of the questions you are asking is, why did Zimbabwe experience it and Weimar, etcetera. Imagine we are working on a master thesis and you are being told the topic you want to cover is way too broad, that's what's going on here.

Let's focus on the question, why has hyperinflation not happened in the United States after so much quantitative easing? That's what you are asking and again unfortunately this question, I have to be believe is being prompted because of what people like Peter Schiff go on shrieking all the time on television, again over simplifying the topic.

I think it's important that we learn about the Bretton Woods system and you can learn a bit about it here:
<https://www.economist.com/the-economist-explains/2014/06/30/what-was-decided-at-the-bretton-woods-summit>

From that meeting, it was decided that the U.S. dollar would become the world's reserve currency. In propping the U.S. dollar as the world's reserve currency, it created a system where every nation on the planet had to settle its international trade in the reserve currency, so every nation who engages in international trade has to have a certain amount in U.S. dollars in reserve.

This created what called Triffin's Paradox.

The core of Triffin's Paradox is that the issuer of a reserve currency must serve two entirely different sets of users: the domestic economy, and the international economy, but you will not be able to make both sets of users happy.

So our Federal Reserve needs to print USD to meet global demand for US dollars, but this money printing can lead to the devaluation of the currency which hurts the people of the issuing country by losing purchasing power, but does help foreign governments to be able to make their debt payments in USDs and certainly the people of these other nations like to stockpile USD in case their local currency goes kaput.

So the question becomes why did this not cause hyperinflation at home in the United States?

The grossly oversimplified answer would be, it did not print enough money in the world for the dollar to lose its value, if we agree on the premise that what is valuable is what is scarce, despite hearing billions of dollars printed, it still do not satisfy the whole planet, so its still scarce, still hold value.

So hyperinflation did not happen because the Federal Reserve was not printing up paper dollars and passing it out on the street, but rather meeting the liquidity needs of commercial banks and other central banks and institutions. That in itself was never going to cause hyperinflation.

Hyperinflation may happen if and when the Federal Reserve decides to start issuing money directly to the public. Why? Because now you have excess amount of paper in the hands of consumers who are going to be chasing the same scarce goods.


---

### Answer by username_2 on 2021-09-25. Score: 0

As you have been already answered on therms of the quantitative equation of money, I will give you others approachs between the realtionship of these ways of funding and real variables.

First, more printed money lead to more assets and therefore more demand coming as effect of this new financial wealth, that could lead to inflation as well, depending on the real supply.

Also, the inflation could come from the depreciation of US dollar caused by increasing it's supply or from another perspective, the increase on the supply of money implies\* lower rate of interest, that could imply a lower exchange rate as capitals tend to go out looking for better interest rate. The lower rate of exchange on dollar leads to more expensive imports and hence an increase on inflation rate. Lower interest and rate of exchange could boost the demand as there exist the posibility of lead to an increase on real invest or on exports (Note that there's no certainty because there's other variables involved.

The effects over inflation coming from the increase of the demand depends on the size of the output gap.

\*If there isn't an sterilization policy.


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