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Inflation and Public Debt Reversals in Advanced Economies / Ichiro Fukunaga.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Fukunaga, Ichiro.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Advanced Economies.
- Debt Markets.
- Debt Service Burden.
- Finance and Financial Sector Development.
- Financial Repression.
- Inflation.
- Macroeconomics and Economic Growth.
- Public Debt.
- Public Sector Development.
- Local Subjects:
- Advanced Economies.
- Debt Markets.
- Debt Service Burden.
- Finance and Financial Sector Development.
- Financial Repression.
- Inflation.
- Macroeconomics and Economic Growth.
- Public Debt.
- Public Sector Development.
- Physical Description:
- 1 online resource (23 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2020.
- System Details:
- data file
- Summary:
- 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 the 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 the public debt burden only marginally in many advanced economies.
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