Deflation and Public Finances: Evidence from the Historical Records
IMF Working Papers, July 28, 2015
Source details
- Canonical URL
- Deflation and Public Finances: Evidence from the Historical Records
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Bibliographic details
- Authors: Nicolas End, Sampawende J Tapsoba, G. Terrier, Renaud Duplay
- Published: July 28, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513528243.001
Study scope and data
- Dataset panel covering 150 years and 21 advanced economies.
- Paper length: 41 pages.
- Publication: IMF Working Papers, Working Paper No. 2015/176, Issue 176, Volume 2015.
- Authors: Nicolas End, Sampawende J Tapsoba, G. Terrier, Renaud Duplay.
- Date: July 28, 2015.
- DOI: https://doi.org/10.5089/9781513528243.001
- ISBN: 9781513528243
- ISSN: 1018-5941
Main empirical findings
- Deflation affects public finances mostly through increases in public debt ratios, reflecting a worsening in interest rate–growth differentials.
- On average, a mild rate of deflation increases public debt ratios by almost 2 percent of GDP a year.
- The impact on public debt ratios is larger during recessionary deflations.
Simulation results (European countries)
- Using a simulation model that accounts for composition effects and price expectations:
- A 2 percentage point deflationary shock in both 2015 and 2016 would lead to a deterioration in the primary balance of as much as 1 percent of GDP by 2019.
Policy-relevant themes and keywords
- Subjects examined: Deflation, Economic growth, Economic recession, Fiscal policy, Fiscal stance, Inflation, Prices, Public debt.
- Keywords: Deflation, deflation episode, deflation sample, deflation t, Economic recession, expansionary deflation, fiscal policy, Fiscal stance, Global, Inflation, inflation rate, inflation shock, interest rate, Low inflation, Public finances, recessionary deflation, WP
Source: Deflation and Public Finances: Evidence from the Historical Records — Nicolas End, Sampawende J Tapsoba, G. Terrier, Renaud Duplay; July 28, 2015.