Faculty Publications

Title

Deficits and inflation: An open economy model of the United States

Document Type

Article

Journal/Book/Conference Title

Applied Economics

Volume

30

Issue

10

First Page

1307

Last Page

1316

Abstract

The deficit debate is a recurring theme in academic and political circles. The controversy is over the effect of deficits on inflation and interest rates. The existing body of empirical evidence does not resolve the controversy. This paper focuses on the inflationary impact of deficits. The model used is derived from a comprehensive IS-LM analysis which incorporates a foreign trade sector and a general price (adoptive expectation) adjustment mechanism. We test the model using time series data for the United states. From our results we conclude that NIA deficits have no significant bearing on the rate of inflation. © 1998 Routkdge.

Original Publication Date

1-1-1998

DOI of published version

10.1080/000368498324922

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