The impact of a budget deficit on inflation in Zimbabwe

Albert Makochekanwa

MPRA Paper from University Library of Munich, Germany

Abstract: The Zimbabwean economy is one of the many numbers of countries that has experienced a relatively high fiscal deficit for a prolonged period with the result of a high 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 – 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: 2008-04-08
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24227

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