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Inflationary effects of budget deficit financing in contemporary economies

Author

Listed:
  • Angela Boariu
  • Irina Bilan

    (The Department of Business Administration, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University)

Abstract

This paper tries to analyse the relations existing between the different ways of financing budget deficit and inflation, underlining the terms of these relations and the involved social and economic effects. An important source of inflation is considered to be the financing of budget deficits by direct appeal to the central bank's resources, nowadays forbidden by law in most countries for its negative impact. Nevertheless, inflation can also appear as a consequence of debt financing of the budget deficit, considered acceptable in the contemporary society, when it indirectly involves the increase in the amount of money available to the economy above what's absolutely necessary.

Suggested Citation

  • Angela Boariu & Irina Bilan, 2007. "Inflationary effects of budget deficit financing in contemporary economies," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 54, pages 77-82, November.
    • Handle: RePEc:aic:journl:y:2007:v:14:p:77-82
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    Citations

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    Cited by:

    1. Benjamin Ayodele Folorunso, 2013. "Relationship between Fiscal Deficit and Public Debt in Nigeria: an Error Correction Approach," Journal of Economics and Behavioral Studies, AMH International, vol. 5(6), pages 346-355.
    2. Joel Hinaunye Eita & Victoria Manuel & Erwin Naimhwaka & Florette Nakusera, 2021. "The Impact of Fiscal Deficit on Inflation in Namibia," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 10(1), pages 141-164.

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