TY  - JOUR
AU  - Buiter, Willem H
AU  - Patel, Urjit R
TI  - Debt, Deficits and Inflation:  An Application to the Public Finances of India
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3287
PY  - 1990
Y2  - March 1990
DO  - 10.3386/w3287
UR  - http://www.nber.org/papers/w3287
L1  - http://www.nber.org/papers/w3287.pdf
N1  - Author contact info:
Willem H. Buiter
Citigroup Centre
London E14 5LB
UNITED KINGDOM
Canada
E-Mail: whb1002@gmail.com

Urjit R. Patel
Reliance Industries Ltd.
222 Nariman Point, Mumbai 400 021
INDIA
E-Mail: upatel@brookings.edu
AB  - 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.
ER  -