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Inflation und Staatliche Budgetpolitik
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 104 (1984), Iss. 6 : pp. 675–693
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Baltensperger, Ernst
References
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Abstract
The paper deals with the relationship between inflation and government debt financing. The analysis starts from the Barro-Ricardo hypothesis, according to which government debt is not net wealth in the aggregate and thus cannot affect demand via a traditional wealth effect. It is shown that even under such conditions debt financing may have inflationary effects, because one of the forms of financing future interest payments available to the government is the inflation tax - a possibility, which can be anticipated and discounted to the present by market participants. The role of uncertainty about alternative modes of financing is stressed