01840cas a2200241 a 4500 AALejournalIMF002098 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852561 1018-5941 BD-DhAAL BD-DhAAL Barrionuevo, Jose. Inflation and Fiscal Deficits : The Irrelevance of Debt and Money Financing / Jose Barrionuevo. Washington, D.C. : International Monetary Fund, 1992. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The purpose of this paper is to present a model that circumvents the requirement of explicitly setting a period in which the fiscal budget is to be balanced, yet implies that increases in the growth of public debt are bound to increase inflation when there is no perceived commitment to reduce the fiscal deficit. The model is based on a modified version of the cash in advance constraint. The results of numerical simulations suggest that an increase in the growth of debt to finance current consumption leads to an equal increase in inflation. The timing of this increase varies with the size of the deficit and the pace of economic growth. It is shown that small increases in small deficits yield fairly significant increases in inflation. Three policy conclusions are offered. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1992/102 Full text available on IMF http://elibrary.imf.org/view/journals/001/1992/102/001.1992.issue-102-en.xml IMF e-Library