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Inflation and the Measurement of Fiscal Deficits

Author

Listed:
  • Vito Tanzi

    (International Monetary Fund)

  • Mario I. Blejer

    (International Monetary Fund)

  • Mario O. Teijeiro

    (International Monetary Fund)

Abstract

The presence of high inflation raises questions about the usefulness of the conventional measure of the fiscal deficit as a gauge of necessary fiscal adjustment. Economists are divided on this issue: those who believe that regardless of inflation the conventional measure is the relevant one; and those who maintain that a measure that excludes from the deficit the part of interest payments that compensates bondholders for inflation is the correct one. This paper analyzes these issues, concluding that neither measure gives the right signal, and that consequently both measures should be calculated when inflation is high.

Suggested Citation

  • Vito Tanzi & Mario I. Blejer & Mario O. Teijeiro, 1987. "Inflation and the Measurement of Fiscal Deficits," IMF Staff Papers, Palgrave Macmillan, vol. 34(4), pages 711-738, December.
    • Handle: RePEc:pal:imfstp:v:34:y:1987:i:4:p:711-738
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    Cited by:

    1. Gilles Mourre & Aurélien Poissonnier, 2019. "What Drives the Responsiveness of the Budget Balance to the Business Cycle in EU Countries?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 237-249, July.
    2. Escudé, Guillermo, 1989. "Ajuste macroeconómico, deuda externa y ahorro en la Argentina," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34185, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. -, 1990. "Ahorro y formación de capital: experiencias latinoamericanas: Argentina, Brasil, Chile, El Salvador, México," Series Históricas 9125, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Moraes, Pedro Bodin de, 1990. "La tasa de ahorro nacional del Brasil en los años ochenta," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29635, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. repec:hal:spmain:info:hdl:2441/3161 is not listed on IDEAS
    6. Marshall, Jorge & Schmidt-Hebbel, Klaus, 1989. "Un marco analítico-contable para la evaluación de la política fiscal en América Latina," Series Históricas 9052, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Jérôme Creel & Henri Sterdyniak, 1995. "Les déficits publics en Europe," SciencePo Working papers Main hal-03458224, HAL.
    8. Rocha, Roberto de Rezende & Saldanha, Fernando, 1995. "Fiscal and quasi-fiscal deficits, nominal and real: measurement and policy issues," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 49(3), July.
    9. Helmut Reisen, 1991. "Dette publique, compétitivité extérieure et discipline budgétaire dans les pays en développement," Revue Tiers Monde, Programme National Persée, vol. 32(126), pages 317-342.
    10. repec:hal:spmain:info:hdl:2441/2965 is not listed on IDEAS
    11. Yannis A. Monogios & Christos Pitelis, 2004. "On (Ultra) rationality and the corporate and government veils," Manchester School, University of Manchester, vol. 72(3), pages 382-402, June.
    12. Lerda, Juan Carlos & Marshall, Jorge & Larrañaga, Osvaldo, 1989. "Medición y descomposición del déficit público en América Latina," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29424, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Doris Prammer & Lukas Reiss, 2015. "Impact of Inflation on Fiscal Aggregates in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 27-41.
    14. Jérôme Creel & Henri Sterdyniak, 1995. "Les déficits publics en Europe. Causes, conséquences ou remèdes à la crise ?," Revue Économique, Programme National Persée, vol. 46(3), pages 645-656.
    15. Erdős, Tibor, 1999. "Az infláció és néhány közgazdasági kategória kapcsolata [The relationship between inflation and some macroeconomic categories]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 629-656.
    16. Buira Seira, Ariel, 1990. "Los determinantes del ahorro en México," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29638, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    17. Menjívar, Oscar, 1990. "Estudio sobre el ahorro nacional para el caso de El Salvador," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29637, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    18. Moraes, Pedro Bodin de, 1989. "The Brazilian national saving rate in the 1980's," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34762, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Eyzaguirre, Nicolás, 1990. "Ahorro e inversión bajo restricción externa y fiscal: el caso de Chile, 1982-1987," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29636, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    20. Magazzino, Cosimo, 2011. "The nexus between public expenditure and inflation in the Mediterranean countries," MPRA Paper 28493, University Library of Munich, Germany.

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