<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The study seeks to empirically test the hypothesis that public debt has a significant influence on inflation in Zimbabwe, covering the period 1980-2020. The study was motivated by recent trends in public debt and domestic inflation in Zimbabwe, and the need to guide debt-inflation related policy. These latest trends have started to ring alarming bells, which raises questions on the effectiveness of fiscal and monetary policies in bringing macroeconomic stability in the country. Applying the Autoregressive Distributed Lag (ARDL) bounds testing procedure to cointegration and an error correction mechanism (ECM), expanded by incorporating structural breaks, the study finds evidence in support of positive and significant impact of public debt on inflation dynamics in Zimbabwe, particularly in the long run. Based on the findings, public debt dynamics matter for inflation process in Zimbabwe. That is, fiscal policy can be considered to be an important determinant of the effectiveness of monetary policy in Zimbabwe. Therefore, the government should be mindful of increases in public debt as this was found to be inflationary.</p>
</abstract>

The study seeks to empirically test the hypothesis that public debt has a significant influence on inflation in Zimbabwe, covering the period 1980-2020. The study was motivated by recent trends in public debt and domestic inflation in Zimbabwe, and the need to guide debt-inflation related policy. These latest trends have started to ring alarming bells, which raises questions on the effectiveness of fiscal and monetary policies in bringing macroeconomic stability in the country. Applying the Autoregressive Distributed Lag (ARDL) bounds testing procedure to cointegration and an error correction mechanism (ECM), expanded by incorporating structural breaks, the study finds evidence in support of positive and significant impact of public debt on inflation dynamics in Zimbabwe, particularly in the long run. Based on the findings, public debt dynamics matter for inflation process in Zimbabwe. That is, fiscal policy can be considered to be an important determinant of the effectiveness of monetary policy in Zimbabwe. Therefore, the government should be mindful of increases in public debt as this was found to be inflationary.

Public debt and inflation dynamics: Empirical evidence from Zimbabwe

Croatian Review of Economic, Business and Social Statistics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Public debt and inflation dynamics: Empirical evidence from Zimbabwe"}

The study seeks to empirically test the hypothesis that public debt has a significant influence on inflation in Zimbabwe, covering the period 1980-2020. The...

Public debt and inflation dynamics: Empirical evidence from Zimbabwe

Published Online: Dec 23, 2021

Page range: 14 - 30

Received: Jun 29, 2021

Accepted: Sep 09, 2021

DOI: https://doi.org/10.2478/crebss-2021-0007

Keywords
Autoregressive Distributed Lag (ARDL), inflation, public debt, Zimbabwe

© 2021 Talknice Saungweme et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Public debt and inflation dynamics: Empirical evidence from Zimbabwe

Published Online: Dec 23, 2021

Page range: 14 - 30

Received: Jun 29, 2021

Accepted: Sep 09, 2021

DOI: https://doi.org/10.2478/crebss-2021-0007

KeywordsAutoregressive Distributed Lag (ARDL), inflation, public debt, Zimbabwe

© 2021 Talknice Saungweme et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Autoregressive Distributed Lag (ARDL), inflation, public debt, Zimbabwe