Egypt's public debt exceeds 100% of GDP in 2018. In some cases, inflation (in some special cases) may help reduce the real value of public debt and thus reduce debt to GDP ratio. This policy is similar to that used at the end of World War II in some HDCs. This paper therefore provides an analytical framework for determining the impact of inflation on nominal public debt. Accordingly, Other things being equal, to reduce the current rates of public debt to GDP, an inflation rate more than 12.28% and of 7.35% per annum should be attained in the short run (no Fisher effect) and long run (full Fisher effect) respectively, and the maximum cumulative level to use inflation policy to erode the real value of public debt is about 125.6%, the level at which the ratio of external public debt is equal to the ratio of domestic public debt, so that in the long run any decrease in real value of domestic public debt will be equivalent to the increase in external debt.
El Sayed, M. (2019). Could Egyptian government use inflation. Scientific journal of the Faculty of Economic Studies and Political Science, 4(8), 1-35. doi: 10.21608/esalexu.2019.110738
MLA
Mustafa El Sayed. "Could Egyptian government use inflation", Scientific journal of the Faculty of Economic Studies and Political Science, 4, 8, 2019, 1-35. doi: 10.21608/esalexu.2019.110738
HARVARD
El Sayed, M. (2019). 'Could Egyptian government use inflation', Scientific journal of the Faculty of Economic Studies and Political Science, 4(8), pp. 1-35. doi: 10.21608/esalexu.2019.110738
VANCOUVER
El Sayed, M. Could Egyptian government use inflation. Scientific journal of the Faculty of Economic Studies and Political Science, 2019; 4(8): 1-35. doi: 10.21608/esalexu.2019.110738
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