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Credibility and Nominal Debt: Exploring the Role of Maturity in Managing Inflation

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  • International Monetary Fund

Abstract

This paper focuses on the role of debt maturity in managing the government’s incentives to use opportunistic inflation to reduce the ex post real value of its nominal liabilities. The maturity structure of government debt is shown to be a powerful instrument to affect the time profile of the inflation tax base and, hence, to mitigate the distortions introduced by time inconsistency on taxation policies. The nature of the optimal policy is shown to be heavily dependent on the type of precommitment enjoyed by policymakers.

Suggested Citation

  • International Monetary Fund, 1989. "Credibility and Nominal Debt: Exploring the Role of Maturity in Managing Inflation," IMF Working Papers 1989/073, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1989/073
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=29466
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    Cited by:

    1. Ajide, Kazeem B. & Raheem, Ibrahim D. & Asongu, Simplice A., 2019. "Dollarization and the “unbundling” of globalization in sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 47(C), pages 398-409.
    2. Mr. Eduardo Levy Yeyati & Mr. Alain Ize, 2005. "Financial De-Dollarization: Is it for Real?," IMF Working Papers 2005/187, International Monetary Fund.
    3. Mr. Esteban Vesperoni & Walter Orellana R., 2008. "Dollarization and Maturity Structure of Public Securities: The Experience of Bolivia," IMF Working Papers 2008/157, International Monetary Fund.
    4. Kazeem B. Ajide & Ibrahim D. Raheem & Simplice A. Asongu, 2018. "Dollarization and the “Unbundling†of Globalization in sub-Saharan Africa," Research Africa Network Working Papers 18/034, Research Africa Network (RAN).
    5. Miss Nkunde Mwase & Mr. Francis Y Kumah, 2015. "Revisiting the Concept of Dollarization: The Global Financial Crisis and Dollarization in Low-Income Countries," IMF Working Papers 2015/012, International Monetary Fund.

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