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 -