Debt, Cash Flow and Inflation Incentives: A Swedish Example

Mats Persson, Torsten Persson () and Lars Svensson

No 5772, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The fiscal gains from, and hence the political incentives to, an increase in inflation rate of ten percentage points may be substantial: with Swedish data from 1994, these gains would have been an annual real flow of 3-4 percent of GDP, or a capitalized value of nearly 100 percent of GDP. They would mainly have arisen from the nominalistic features of the tax and transfer systems rather than from the traditional sources: seignorage and real depreciation of the public debt. The welfare costs of such an inflation increase would have been even larger, however, and would thus have reduced net welfare. Possible institutional reforms, aimed at making the political costs of inflation more equal to the social costs, are presented and discussed

JEL-codes: E31 H62 (search for similar items in EconPapers)
Date: 1996-09
Note: IFM ME PE
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Citations: View citations in EconPapers (19)

Published as The Debt Burden and it's Consequences for Monetary Policy, King, M. and G. Calvo, eds., London: MacMillan, 1998, pp. 28-62.

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Related works:
Chapter: Debt, Cash Flow and Inflation Incentives: A Swedish Example (1998)
Working Paper: Debt, cash flow and inflation incentives: A Swedish example (1997)
Working Paper: Debt, Cash Flow and Inflation Incentives: A Swedish Example (1996)
Working Paper: Debt, Cash Flow and Inflation Incentives: A Swedish Example (1996)
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