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What Is the Relationship between Large Deficits and Inflation in Industrialized Countries?
Economic Perspectives, Federal Reserve Bank of Chicago (2010)
  • Marco Bassetto, Federal Reserve Bank of Chicago
  • R. Andrew Butters, Federal Reserve Bank of Chicago
Abstract

Examining industrialized countries, the authors find that large deficits are not associated with higher inflation contemporaneously, nor are they associated with the emergence of higher inflation in subsequent years. This finding suggests that countries that can afford large deficits have built solid reputations and institutions supporting a sound monetary policy and the reversion to a stable fiscal regime.

Disciplines
Publication Date
2010
Citation Information
Marco Bassetto and R. Andrew Butters. "What Is the Relationship between Large Deficits and Inflation in Industrialized Countries?" Economic Perspectives, Federal Reserve Bank of Chicago Vol. 34 Iss. 3 (2010)
Available at: http://works.bepress.com/bassetto/16/