We examine the relationship between inflation and fiscal sustainability with a two-step approach. In the first step, we … various measures of inflation such as headline inflation, core inflation, energy inflation, and food inflation affect the … estimate of fiscal sustainability found previously. Our findings indicate that higher inflation rates contribute positively to …

positive if the central bank adopts closed-loop strategies that raise the real interest rate when inflation is above target … owing to fiscal deviations. More aggressive defence of the inflation target implies lower debt and higher welfare. Simple …