Inflation and Public Debt Reversals in Advanced Economies

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 r...

Full description

Bibliographic Details
Main Authors:	Fukunaga, Ichiro, Komatsuzaki, Takuji, Matsuoka, Hideaki
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	INFLATION PUBLIC DEBT FINANCIAL REPRESSION ADVANCED ECONOMIES DEBT SERVICE BURDEN
Online Access:	http://documents.worldbank.org/curated/en/178761580308301016/Inflation-and-Public-Debt-Reversals-in-Advanced-Economies http://hdl.handle.net/10986/33265

id	okr-10986-33265
recordtype	oai_dc
spelling	okr-10986-332652022-09-20T00:12:51Z Inflation and Public Debt Reversals in Advanced Economies Fukunaga, Ichiro Komatsuzaki, Takuji Matsuoka, Hideaki INFLATION PUBLIC DEBT FINANCIAL REPRESSION ADVANCED ECONOMIES DEBT SERVICE BURDEN 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. 2020-01-30T20:29:29Z 2020-01-30T20:29:29Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/178761580308301016/Inflation-and-Public-Debt-Reversals-in-Advanced-Economies http://hdl.handle.net/10986/33265 English Policy Research Working Paper;No. 9129 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INFLATION PUBLIC DEBT FINANCIAL REPRESSION ADVANCED ECONOMIES DEBT SERVICE BURDEN
spellingShingle	INFLATION PUBLIC DEBT FINANCIAL REPRESSION ADVANCED ECONOMIES DEBT SERVICE BURDEN Fukunaga, Ichiro Komatsuzaki, Takuji Matsuoka, Hideaki Inflation and Public Debt Reversals in Advanced Economies
relation	Policy Research Working Paper;No. 9129
description	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.
format	Working Paper
author	Fukunaga, Ichiro Komatsuzaki, Takuji Matsuoka, Hideaki
author_facet	Fukunaga, Ichiro Komatsuzaki, Takuji Matsuoka, Hideaki
author_sort	Fukunaga, Ichiro
title	Inflation and Public Debt Reversals in Advanced Economies
title_short	Inflation and Public Debt Reversals in Advanced Economies
title_full	Inflation and Public Debt Reversals in Advanced Economies
title_fullStr	Inflation and Public Debt Reversals in Advanced Economies
title_full_unstemmed	Inflation and Public Debt Reversals in Advanced Economies
title_sort	inflation and public debt reversals in advanced economies
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/178761580308301016/Inflation-and-Public-Debt-Reversals-in-Advanced-Economies http://hdl.handle.net/10986/33265
_version_	1764478352824991744

Inflation and Public Debt Reversals in Advanced Economies

Similar Items