Abstract
A recent paper in thisJouRNAL argued that pegging the price of a new financial instrument offered a way to eliminate inflation (Dowd, I994). The proposal is re-examined in Section I where it is argued that the proposal must be amended if it is to succeed in stabilising the price level. Section II uses a representative agent model to illustrate the arguments of Section I and draws attention to the budgetary implications of the proposal, which implies a resource transfer between the private sector and the government equivalent to a change in tax or expenditure policies. Section III concludes.
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