Optimal reform postponement

The postponement of a reform program recognized to be necessary to control inflation is examined as a decision in an optimal control framework. With a deteriorating and increasingly costlier inflation, it is found that reforms are both more likely to be implemented and more likely to fail as inflation rises. Factors suggesting improved future conditions for a reform, such as the possibility of external aid, induce further postponement. Indexation, and any other measures that reduce the current costs of inaction have the same effect.