skip to content

Faculty of Economics

Journal Cover

Faraglia, E., Marcet, A., Oikonomou, R. and Scott, A.

The impact of debt levels and debt maturity on inflation

The Economic Journal

Vol. 123(566) pp. F164-F192 (2013)

Abstract: We examine the implications for optimal inflation of changes in the level and maturity of government debt under the assumption where fiscal and monetary policies co-ordinate, and in the case of an independent central bank following a Taylor rule. Under co-ordination, inflation persistence and volatility depend on the sign, size and maturity of debt. Higher debt leads to higher inflation and longer maturity leads to more persistent inflation although inflation plays a minor role in achieving fiscal sustainability. Under an independent monetary authority, inflation is higher, more volatile and more persistent and plays a significant role in achieving fiscal solvency.

Author links: Elisa Faraglia  

Publisher's Link:

Papers and Publications

Recent Publications

Faraglia, E., Marcet, A., Oikonomou, R. and Scott, A. Government Debt management: the Short and the Long of it Review of Economic Studies [2019]

Onatski, A. and Wang, C. Alternative Asymptotics for Cointegration Tests in Large VARs Econometrica [2018]

Vogt, M., Linton, O. Multiscale clustering of nonparametric regression curves Journal of Econometrics [2020]

Aidt, T. S. and Franck, R. What motivates and oligarchic elite to democratize? Evidence from the roll call vote on the Great Reform Act of 1832 Journal of Economic History [2019]