|Title:||Interconnections between Public Indebtedness and Inflation in Contemporary Economies|
Vol. 7, No 4, 2014
Published date: 20-11-2014 (print) / 20-11-2014 (online)
Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
|Keywords:||public indebtedness, inflation, money supply, debt amortization|
|JEL classification:||E31, E51, H63|
This paper aims to analyze the specific interconnections established between public indebtedness and inflation, both from the perspective of considering inflation as a result of public borrowing and of voluntarily promoting inflation to reduce the (real) value of public debtand to ease its burden. It identifies the channels through which these effects are occurring, it determines the conditions of their manifestation and evaluates their relevance for different (developed and developing) contemporary economies. Although promoting irrational public borrowing may lead to inflation, such a correlation proved to be quite difficult to identify in the practice, especially for currently developed economies.