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Drivers of inflation-linked public debt: an empirical investigation

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  • Patricia Gomez-Gonzalez

    (Fordham University)

Abstract

This paper empirically explores the drivers behind the cross-country heterogeneity in inflation-linked (IL) debt for advanced and emerging economies between 1995 and 2017. It finds that countries with more flexible exchange rate regimes and higher tax rates issue more of their public debt linked to inflation. There is some evidence that high inflation countries issue more IL debt, but no indication that country size, financial development, or institutional quality is significantly associated with the IL debt share. For IL debt over gross domestic product, however, institutional quality matters, but the exchange rate regime and inflation do not.

Suggested Citation

  • Patricia Gomez-Gonzalez, 2021. "Drivers of inflation-linked public debt: an empirical investigation," International Economics and Economic Policy, Springer, vol. 18(1), pages 223-244, February.
    • Handle: RePEc:kap:iecepo:v:18:y:2021:i:1:d:10.1007_s10368-020-00485-z
    DOI: 10.1007/s10368-020-00485-z
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