Is inflation fiscally determined?

Lamia Bazzaoui, Jun Nagayasu

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the relationship between fiscal policy and inflation for 44 countries, from 1960 to 2020. The study was conducted using a panel VAR approach while accounting for the difference in monetary policy frameworks and the levels of fiscal space across countries. Results suggest that budget deficits are less likely to cause inflation when monetary policy is based on inflation targeting. In contrast, they are inflationary in the group of countries with a poorly structured monetary policy (such as partially dollarized Latin American economies).

Original languageEnglish
Article number11306
JournalSustainability (Switzerland)
Volume13
Issue number20
DOIs
Publication statusPublished - 2021 Oct 1

Keywords

  • Fiscal policy
  • Monetary policy
  • Panel VAR GMM
  • Public debt
  • inflation

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Renewable Energy, Sustainability and the Environment
  • Environmental Science (miscellaneous)
  • Energy Engineering and Power Technology
  • Management, Monitoring, Policy and Law

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