Credibility and Nominal Debt: Exploring the Role of Maturity in Managing Inflation

28 Pages Posted: 15 Feb 2006

See all articles by Pablo E. Guidotti

Pablo E. Guidotti

Ministry Of Economy, Public Works and Services, Argentina

Date Written: September 14, 1989

Abstract

This paper focuses on the role of debt maturity in managing the government`s incentives to use opportunistic inflation to reduce the ex post real value of its nominal liabilities. The maturity structure of government debt is shown to be a powerful instrument to affect the time profile of the inflation tax base and, hence, to mitigate the distortions introduced by time inconsistency on taxation policies. The nature of the optimal policy is shown to be heavily dependent on the type of precommitment enjoyed by policymakers.

JEL Classification: 320

Suggested Citation

Guidotti, Pablo E., Credibility and Nominal Debt: Exploring the Role of Maturity in Managing Inflation (September 14, 1989). IMF Working Paper No. 89/73, Available at SSRN: https://ssrn.com/abstract=884960

Pablo E. Guidotti

Ministry Of Economy, Public Works and Services, Argentina ( email )

Hipolito Yrigoyen 250-5th Floor-Room 506
Buenos Aires, 1310
Argentina

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
81
Abstract Views
537
Rank
547,434
PlumX Metrics