Inflation and public debt reversals in the G7 countries

Bernardin Akitoby, Takuji Komatsuzaki, and Ariel Binder

This paper investigates the impact of low or high inflation on the public debt-to-GDP ratio in the G-7 countries. Our simulations suggest that if inflation were to fall to zero for five years, the average net debt-to-GDP ratio would increase by about 5 percentage points over the next five years. In contrast, raising inflation to 6 percent for the next five years would reduce the average net debt-to-GDP ratio by about 11 percentage points under the full Fisher effect and about 14 percentage points under the partial Fisher effect. Thus higher inflation could help reduce the public debt-to-GDP ra

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Year of publication:	2014
Authors:	Akitoby, Bernardin ; Komatsuzaki, Takuji ; Binder, Ariel
Publisher:	Washington, DC : IMF
Subject:	Öffentliche Schulden \| Public debt \| Inflation \| Schuldenkrise \| Debt crisis \| Schuldenmanagement \| Debt management \| G7-Staaten \| G7 countries

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Extent:	Online-Ressource (27 S.) graph. Darst.
Series:	IMF working papers. - Washington, DC : IMF, ZDB-ID 2108494-4. - Vol. 14/96
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Notes:	Description based upon print version of record Systemvoraussetzungen: Acrobat Reader Cover; Contents; I. Introduction; II. Brief Literature Review; III. Simulating Seigniorage From Higher Inflation; A. Methodology; B. Results; IV. Erosion of Real Value of Debt; A. Methodology; B. Baseline Results-Full Fisher Effect; C. Simulations of Partial Fisher Effect; V. Robustness of Assumptions; VI. Concluding Remarks and Policy Implications; Tables; 1. Seignorage Gains from Inflation; 2. Zero Inflation Simulation Results; 3. Baseline Simulation Results; 4. 30 Percent of GDP Debt Reduction Scenarios; 5. Debt-Reducing Impacts of Inflation with Reduced Fisher Effect (Alpha=0.5) 6. Debt-Reducing Impacts of Inflation with Reduced Fisher Effect (Alpha=0)7. Robustness Regressions (Average Maturity); 7. Robustness Regressions (Average Maturity); 8. Robustness Regressions (Short- Term Share); Figures; 1. Gross Public Debt in Advanced and G7 Economies, 1980-2017; 2. Percentage Breakdown of Central Government Debt, 2010; 3. Debt Reduction as a Function of Medium- and Long- Term Debt Share; 4. Debt Reduction Outcomes with Varying Short-Term Debt Shares; 5. How Varying Fisher Effects Impact Debt Reduction for G7 Average; 6. Inflation Scatter Plots, All OECD Countries 7. Inflation Scatter Plots, Selected OECD Countries8. Average Maturity, Inflation, and Public Debt in G7 Economies; References
ISBN:	978-1-4983-6995-4
Other identifiers:	10.5089/9781498369954.001 [DOI]
Source:	ECONIS - Online Catalogue of the ZBW

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