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Inflation and the Real Value of Debt: A Double-edged Sword

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Abstract

The recent bout of inflation will immediately reduce the real value of existing debts, but it will also tend to raise expected inflation. This could raise future borrowing costs.

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  • Christopher J. Neely, 2022. "Inflation and the Real Value of Debt: A Double-edged Sword," On the Economy 94567, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:l00001:94567
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    File URL: https://www.stlouisfed.org/on-the-economy/2022/aug/inflation-real-value-debt-double-edged-sword
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    Cited by:

    1. Bańkowski, Krzysztof & Checherita-Westphal, Cristina & Jesionek, Julia & Muggenthaler, Philip & Frutos, Mario Alloza & Avgousti, Aristoklis & Briodeau, Clémence & Brusbārde, Baiba & Caprioli, Francesc, 2023. "The effects of high inflation on public finances in the euro area," Occasional Paper Series 332, European Central Bank.

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    Keywords

    inflation; real value of debt;

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