Download or read book The Effects of Inflation on Public Finances written by Mr. Daniel Garcia-Macia and published by International Monetary Fund. This book was released on 2023-05-05 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does inflation help improve public finances? This paper documents the dynamic responses of fiscal variables to an inflation shock, using both quarterly and annual panel data for a broad set of economies. Inflation shocks are estimated to improve fiscal balances temporarily, as nominal revenues track inflation closely, while nominal primary expenditures take longer to catch up. Inflation spikes also lead to a persistent reduction in debt to GDP ratios, both due to the primary balance improvement and the nominal GDP denominator channel. However, debt only falls with inflation surprises—rises in inflation expectations do not improve debt dynamics, suggesting limits to debt debasement strategies. The results are robust to using various inflation measures and instrumental variables.
Download or read book Deflation and Public Finances written by Mr.Nicolas End and published by International Monetary Fund. This book was released on 2015-07-28 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of deflation on fiscal aggregates. With deflation relatively rare in modern history, it relies mostly on the historical records, using a dataset panel covering 150 years and 21 advanced economies. Empirical evidence shows that deflation affects public finances mostly through increases in public debt ratios, reflecting a worsening in interest rate–growth differentials. On average, a mild rate of deflation increases public debt ratios by almost 2 percent of GDP a year, this impact being larger during recessionary deflations. Using a simulation model that accounts for composition effects and price expectations, we also find that, for European countries, a 2 percentage point deflationary shock in both 2015 and 2016 would lead to a deterioration in the primary balance of as much as 1 percent of GDP by 2019.
Download or read book The Effects of High Inflation on Public Finances in the Euro Area written by Krzysztof Bańkowski and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent spike in inflation, unprecedented in the history of the Economic and Monetary Union (EMU), has had major consequences for all areas of the economy, including public finances. This paper aims to provide a detailed assessment of the effects of high inflation on fiscal accounts in the euro area. Relying on the wealth of expertise in the Eurosystem - within the Working Group on Public Finance - it documents spending indexation arrangements in all euro area countries. Thanks to this knowledge, the ECB's fiscal projection platform, which is the primary evaluation tool for this study, establishes a realistic link between prices and fiscal variables. The results of this paper bring into question the conventional wisdom on the overall positive effects of inflation on fiscal accounts. Indeed, the simulations point to adverse effects from the recent inflation surge, mainly triggered by an external supply shock, on budget balances during 2022-24. This is even without taking into account the negative impact of inflation on the real economy, mainly through monetary policy tightening. The analysis also points to the important role of the denominator effect for debt-to-GDP ratios, which may fall even in the absence of benefits for the budget balance. Finally, the analysis reveals a high degree of heterogeneity across countries.
Download or read book The Impact of Business Cycles and Inflation on the Finances of State and Local Governments written by Roy W. Bahl and published by . This book was released on 1985 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Inflation and Public Debt Reversals in Advanced Economies written by Ichiro Fukunaga and published by International Monetary Fund. This book was released on 2019-12-27 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper quantitatively assesses the effects of inflation shocks on the public debt-to-GDP ratio in 19 advanced economies using simulation and estimation approaches. The simulations based on the debt dynamics equation and estimations of impulse responses by local projections both suggest that a 1 percentage point shock to inflation rate reduces the debt-to-GDP ratio by about 0.5 to 1 percentage points. The results also suggest that the impact is larger and more persistent when the debt maturity is longer, but the difference from the benchmark case is not significant. These results imply that modestly higher inflation, even if accompanied by some financial repression, could reduce public debt burden only marginally in many advanced economies.
Download or read book IMF Staff Papers written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 1963-01-01 with total page 229 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses effects of inflation on economic development. A mild inflation may well encourage little, or no, evasion of the “inflation tax.” On the other hand, a strong inflation, and frequently a mild one also, will lead to community reactions which have effects like those of widespread tax evasion. A development policy may have wider aims than the encouragement of a high level of investment. Inflation has two effects on the desire for liquidity, which are related to the two basic reasons why individuals and businesses wish to hold liquid assets—the speculative and precautionary motives. Inflation increases the value of effective liquidity, thereby raising the community's desire for it, but it makes the most generally accepted store of liquidity unacceptable sources of protection. The control of inflation is only one of the problems facing a government wishing to encourage rapid economic development. The fight against illiteracy, the reform of bureaucratic practices, the building of basic sanitary facilities for the eradication of endemic diseases, the substitution of competitive for monopolistic trade practices, the encouragement of a widespread spirit of entrepreneurship, and the creation of an adequate amount of social capital, may be important prerequisites for rapid growth.
Download or read book The Economics of public finance written by and published by Atlantic Publishers & Distri. This book was released on 1974 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Welfare Costs of Inflation Seigniorage and Financial innovation written by Mr.Jose De Gregorio and published by International Monetary Fund. This book was released on 1991-01-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces transaction costs, a fall in the costs of inflation is equivalent to financial innovation. This can be caused by paying interest on deposits, indexing money, or “dollarizing.” Results indicate that financial innovation raises welfare in low inflation economies while reducing it in high inflation economies, due to the offsetting indirect effect of higher inflation to finance the budget.
Download or read book Currency Inflation and Public Debts An Historical Sketch 1921 written by Edwin Robert Anderson Seligman and published by . This book was released on 2008-06-01 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt: This scarce antiquarian book is a facsimile reprint of the original. Due to its age, it may contain imperfections such as marks, notations, marginalia and flawed pages. Because we believe this work is culturally important, we have made it available as part of our commitment for protecting, preserving, and promoting the world's literature in affordable, high quality, modern editions that are true to the original work.
Download or read book Public Debt Money Supply and Inflation written by Lavern McFarlane and published by International Monetary Fund. This book was released on 2006-05 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides comprehensive empirical evidence that supports the predictions of Sargent and Wallace's (1981) "unpleasant monetarist arithmetic" that an increase in public debt is typically inflationary in countries with large public debt. Drawing on an extensive panel dataset, we find that the relationship holds strongly in indebted developing countries, weakly in other developing countries, but generally not in developed economies. These results are robust to the inclusion of other variables, corrections for endogeneity biases, and relaxation of common-slope restrictions and are invariant over sub-sample periods. We estimate a VAR to trace out the transmission channel and find the impulse responses consistent with the predictions of a forward-looking model of inflation. Wealth effects of public debt could also affect inflation, as posited by the fiscal theory of the price level, but we do not find supportive evidence. The results suggest that the risk of a debt-inflation trap is significant in highly indebted countries, and pure money-based stabilization is unlikely to be effective over the medium term. Our findings stress the importance of institutional and structural factors in the link between fiscal policy and inflation.
Download or read book Corruption in Public Finances and the Effects on Inflation Taxation and Growth written by Sugata Ghosh and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Inflation the Business Cycle and State and Local Government Finances written by Roy W. Bahl and published by . This book was released on 1985 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Great Inflation written by Michael D. Bordo and published by University of Chicago Press. This book was released on 2013-06-28 with total page 545 pages. Available in PDF, EPUB and Kindle. Book excerpt: Controlling inflation is among the most important objectives of economic policy. By maintaining price stability, policy makers are able to reduce uncertainty, improve price-monitoring mechanisms, and facilitate more efficient planning and allocation of resources, thereby raising productivity. This volume focuses on understanding the causes of the Great Inflation of the 1970s and ’80s, which saw rising inflation in many nations, and which propelled interest rates across the developing world into the double digits. In the decades since, the immediate cause of the period’s rise in inflation has been the subject of considerable debate. Among the areas of contention are the role of monetary policy in driving inflation and the implications this had both for policy design and for evaluating the performance of those who set the policy. Here, contributors map monetary policy from the 1960s to the present, shedding light on the ways in which the lessons of the Great Inflation were absorbed and applied to today’s global and increasingly complex economic environment.
Download or read book Tax Limitation Inflation and the Role of Government written by Milton Friedman and published by Dallas : Fisher Institute. This book was released on 1978 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Collection Lags Fiscal Revenue and Inflationary Financing written by Mr.Nurun N. Choudhry and published by International Monetary Fund. This book was released on 1991-04 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper provides empirical evidence on collection lags in major categories of government revenue and analyzes the estimated revenue-eroding effects of inflation within the standard model of inflationary finance. The evidence indicates a wide variation in collection lags among the categories of revenues. The estimated erosion of real fiscal revenue, although varied in the sample countries, appears to have substantially offset gains from the inflation tax, thereby severely restricting the use of this form of taxation in generating resources.
Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.
Download or read book A Growth Model of Inflation Tax Evasion and Financial Repression written by Nouriel Roubini and published by . This book was released on 1992 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we study the effects of policies of financial repression on long term growth and try to explain why optimizing governments might want to repress the financial sector. We also explain why inflation may be negatively related to growth, even though it does not affect growth directly. We argue that the main reason why governments repress the financial sector is that this sector is the source of "easy" resources for the public budget The source of revenue stemming from this intervention is modeled through the inflation tax. Our model has the implication that financial development reduces money demand. Hence, if the government allows for financial development the inflation tax base, and the chance to collect seigniorage, is reduced. To the extent that the financial sector increases the efficiency of the allocation of savings to productive investment, the choice of the degree of financial development will have real effects on the saving and investment rate and on the growth rate of the economy. We show that in countries where tax evasion is large the government will optimally choose to repress the financial sector in order to increase seigniorage taxation. This policy will then reduce the efficiency of the financial sector, increase the costs of intermediation, reduce the amount of investment and reduce the steady state rate of growth of the economy. Financial repression will therefore be associated with high tax evasion, low growth and high inflation.
