Using inflation to erode the US public debt
When economic growth is stalled, the US debt overhang may trigger a rise in inflation of about 5% for several years, research published by the National Bureau of Economic Research, finds.
The research, written by Joshua Aizenman and Nancy Marion, notes that the US federal debt exceeds 50% for the current financial year - the highest ratio since 1955. Consequently there is a strong temptation to inflate away part of the debt burden. The paper uses an analytical framework for determining the
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