Public debt, money and consumer prices: a vector error correction model for Germany

Nastansky, Andreas; Strohe, Hans Gerhard

doi:10.15611/ekt.2015.1.01

Cited by 12 publications

(21 citation statements)

References 23 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…According to Fischer et al (2002), Catao and Terrones (2005), and Lin and Chu (2013), there is a link between fiscal deficit and inflation. Similarly, in their studies, Bleaney (1996), Kwon et al (2006), Nastansky and Strohe (2015), and Romero and Marin (2017) suggest a link between public debt and inflation.…”

Section: Introductionmentioning

confidence: 76%

“…The relationship between public debt and inflation can either be direct or indirect as suggested by Nastansky and Strohe (2015). It is direct when the central bank buys public bonds.…”

Section: Theoretical Literature Reviewmentioning

confidence: 99%

“…The study concluded that regardless of policies followed by the monetary authorities, persistent and growing borrowings by a government would eventually produce inflation. Bleaney (1996), Bilan and Roman (2014), Nguyen (2015), and Nastansky and Strohe (2015) further argue for a positive relationship between public debt and inflation, while Wheeler (1999), Taghavi (2000), and Essien et al (2016), on the other hand, argued for a negative relationship between these variables. There is a dearth in literature on the negative relationship between public debt and inflation.…”

Section: Empirical Literature Reviewmentioning

confidence: 99%

“…Recent studies have emerged to show that inflation is not only a monetary problem but also a fiscal concern that may come from fiscal deficit or public debt (Bleaney, 1996;Catao and Terrones, 2005;Lin and Chu, 2013;Nastansky and Strohe, 2015). Contrary to the monetarist view that only monetary aggregates drive inflation, Sargent and Wallace (1981), and Kwon et al (2006) argue that the Fiscal Theory of Price Level (FTPL) identifies the wealth effect of public debt as an additional channel of fiscal influence on inflation.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Public debt and inflation nexus in Nigeria: An ARDL bounds test approach

Aimola

Odhiambo

2021

Cogent Economics & Finance

View full text Add to dashboard Cite

Inflationary tendencies of public debt have been the cause of an unsettling debate among policymakers in Nigeria. Using the autoregressive distributed lag (ARDL) framework, this study attempts to investigate the impact of total public debt on inflation in Nigeria for the period 1983-2018. The cointegrating regression results reveal evidence of a stable long-run relationship among inflation, total public debt, money supply, interest rate, economic growth, trade openness, and private investment in the presence of structural breaks. Empirical results show that the impact of public debt on inflation is statistically insignificant, irrespective of whether the regression was in the short or the long run. Hence, the study concludes that inflation in Nigeria could be driven by other factors other than public debt.

show abstract

Section: Introductionmentioning

confidence: 76%

“…The relationship between public debt and inflation can either be direct or indirect as suggested by Nastansky and Strohe (2015). It is direct when the central bank buys public bonds.…”

Section: Theoretical Literature Reviewmentioning

confidence: 99%

Section: Empirical Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Public debt and inflation nexus in Nigeria: An ARDL bounds test approach

Aimola

Odhiambo

2021

Cogent Economics & Finance

View full text Add to dashboard Cite

show abstract

“…According to A. Nastansky and H.G. Strohe (2015), the relationship between public debt and inflation can either be direct or indirect.…”

Section: Theoretical Link Between Public Debt and Inflationmentioning

confidence: 99%

Public Debt and Inflation: A Review of International Literature

Aimola

Odhiambo

2020

Folia Oeconomica Stetinensia

View full text Add to dashboard Cite

Research background: Public debt arises mainly from debt-financed deficits. More and more countries are resorting to additional public indebtedness to raise additional financial resources to meet government funding needs, which are unattainable by the usual tax means. As a result, increasingly, government spending is rising faster than revenue is received, and the excess is financed mainly through domestic and external borrowings. Expensive borrowings by a government (in an environment of increasing interest rates) may be harmful to inflation and the macroeconomic stabilisation process. This trend is raising concerns among policymakers as it undermines macroeconomic stability, especially in developing economies with relatively weak and dependent monetary authorities in the formulation and implementation of monetary policies. Hence, the association between public debt and inflation is of importance in the inflationary process of an economy.Purpose: In this paper, theoretical and empirical literature on the link between public debt and inflation has been surveyed in detail. The focus of the paper was centred on the review of literature on the link between total public debt, external public debt, domestic public debt and inflation.Research methodology: This paper presents an extensive review of scholarly studies on the link between public debt and inflation based on their results. The paper analysed, synthesised, and critically evaluated previous studies on the relationship between public debt and inflation on both the theoretical and empirical fronts.Results: The literature reviewed revealed the association between public debt and inflation. The surveyed literature shows that the relationship between public debt and inflation varies from country to country, with either a positive or negative relationship. However, in the majority of the literature, the link between public debt and inflation tilts towards a positive relationship. This finding is more prominent in indebted countries with higher levels of public debt and a less-developed financial market. Although there is no consensus on the positive or negative relationship between public debt and inflation, the study found that a positive relationship between public debt and inflation tends to predominate among the studies reviewed.Novelty: The study provides an insight into the relationship between public debt and inflation based on a detailed review of literature on the subject in both developed and developing economies.

show abstract

The external debt‐inflation nexus in Egypt

Helmy

2021

Journal of Public Affairs

View full text Add to dashboard Cite

Egypt has a long history with external financing dating back to the 19th century. Nevertheless, Egypt's external debt has been mounting remarkably in the past few years. This paper examines the impact of Egypt's external debt on its price level, a topic ignored by researchers. Nonetheless, as inflation is a hydra‐headed problem, this paper develops several models which incorporate fiscal and monetary policies besides other inflation‐inducing internal and external factors using monthly data extending from 2000M1 to 2020 M1. By employing ARDL cointegration analyses on monthly time series variables and using Egypt's wholesale price index to account for inflation, the paper concludes that external debt raises prices both in the short and long runs. Moreover, money supply and interest rate were also found to increase prices in the long run long despite decreasing them in the short run. Finally, upsurges in the international prices of primary products stimulate domestic prices both in the short and long terms, while depreciation in the local currency aggravates inflation in the short and long terms as well. As external debt raises inflation and affects many other inflation‐inducing factors indirectly, the paper concludes that reducing Egypt's external debt may help in curbing Egypt's inflation.

show abstract

Public debt, money and consumer prices: a vector error correction model for Germany

Cited by 12 publications

References 23 publications

Public debt and inflation nexus in Nigeria: An ARDL bounds test approach

Public debt and inflation nexus in Nigeria: An ARDL bounds test approach

Public Debt and Inflation: A Review of International Literature

The external debt‐inflation nexus in Egypt

Contact Info

Product

Resources

About