Inflationary effects of budget deficit financing in contemporary economies

Angela Boariu () and Irina Bilan ()
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Irina Bilan: The Department of Business Administration, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University

Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, 2007, vol. 54, pages 77-82

Abstract: This paper tries to analyse the relations existing between the different ways of financing budget deficit and inflation, underlining the terms of these relations and the involved social and economic effects. An important source of inflation is considered to be the financing of budget deficits by direct appeal to the central bank's resources, nowadays forbidden by law in most countries for its negative impact. Nevertheless, inflation can also appear as a consequence of debt financing of the budget deficit, considered acceptable in the contemporary society, when it indirectly involves the increase in the amount of money available to the economy above what's absolutely necessary.

Keywords: budget deficit; money issuing; debt financing; inflation (search for similar items in EconPapers)
Date: 2007

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Persistent link: http://EconPapers.repec.org/RePEc:aic:journl:y:2007:v:14:p:77-82

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