Impact of Budget Deficit on Inflation in Zimbabwe

Albert Makochekanwa

Economic Research Guardian, 2011, vol. 1, issue 2, 49-59

Abstract: The Zimbabwean economy is one of the countries that once experienced a relatively high fiscal deficit for a prolonged period which resulted in a hyper inflationary environment. This paper examines the deficit-inflation nexus in the Zimbabwean economy and establishes the causal link that runs from the budget deficit to the inflation rate using Johansen (1991, 1995) cointegration technique over the period 1980 to 2005. Due to massive monetization of the budget deficit, significant inflationary effects are found for increases in the budget deficit.

Keywords: Budget deficit; Inflation; Contegration (search for similar items in EconPapers)
JEL-codes: E62 H62 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: The impact of a budget deficit on inflation in Zimbabwe (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:1:y:2011:i:2:p:49-59

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