Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331384 
Year of Publication: 
2025
Series/Report no.: 
WIDER Working Paper No. 52/25
Version Description: 
Correction: An error in the ISBN displayed below was corrected on 19 September 2025.
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Conventional macroeconomics has viewed inflation as a monetary phenomenon through the Quantity Theory of Money. Ever-increasing sovereign debt globally has caused concern among economists. These concerns follow not from the ability of governments to repay their debt, but rather from the impact of sizeable debt portfolios on price levels. The Fiscal Theory of the Price Level epitomizes these concerns, contrasting the traditional view on inflation by arguing that it is a fiscal phenomenon caused by debt issuance without real backing. This study uses this fiscal inflation theory to analyse South Africa's inflation through a fiscal-monetary vector autoregressive (VAR) model, finding that South Africa's inflation dynamics are accurately described by both monetary and fiscal factors, but more so by the latter.
Subjects: 
Monetary and fiscal interactions
Fiscal Theory of the Price Level
inflation
JEL: 
E31
E4
E51
E58
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-611-7
Document Type: 
Working Paper

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