Deficit and External Debt Effects on Money and Inflation in Brazil and Mexico: Some Evidence

Bharat Koluri and Demetrios Giannaros

Eastern Economic Journal, 1987, vol. 13, issue 3, 243-248

Abstract: The purpose of this study is to examine the monetarist propositions regarding the effects of budget deficits, external debt, and money growth on inflation in the cases of Brazil and Mexico. To this end, a money growth equation and a price equation have been specified and estimated for empirical analysis. In general, it is concluded that the government budget deficit is not a determinant of money supply growth or of inflation. External debt is found to be a significant factor of money growth. Also, the results suggest a significant effect of money supply growth on inflation.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:13:y:1987:i:3:p:243-248

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