NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Debt, Deficits and Inflation: An Application to the Public Finances of India

Willem H. Buiter, Urjit R. Patel

NBER Working Paper No. 3287 (Also Reprint No. r1724)
Issued in June 1992
NBER Program(s):   ITI   ME   IFM

The paper studies the solvency of the Indian public sector and the eventual monetization and inflation implied by stabilization of the debt-GNP ratio without any changes in the primary deficit. The nonstationarity of the discounted public debt suggests that indefinite continuation of the pattern of behavior reflected in the historical discounted debt process is inconsistent with the maintenance of solvency. This message is reinforced by the recent behavior of the debt-GNP ratio and the ratio of primary surplus plus seigniorage to GNP. Our estimates of the base money demand function suggest that even maximal use of seigniorage will not be sufficient to restore solvency.

download in pdf format
   (403 K)

email paper

This paper is available as PDF (403 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Journal of Public Economics, Vol. 47, pp. 171-205, (1992).

Users who downloaded this paper also downloaded these:
Buiter and Patel w15934 Fiscal Rules in India: Are They Effective?
Corsetti and Roubini w3658 Fiscal Deficits, Public Debt and Government Solvency: Evidence from OECD Countries
Giannitsarou and Scott w12654 Inflation Implications of Rising Government Debt
Aizenman and Marion w15562 Using Inflation to Erode the U.S. Public Debt
Reinhart and Rogoff w15639 Growth in a Time of Debt
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us