Fiscal Deficit and Inflation: An empirical analysis for India

Tiwari, Aviral Kumar
Tiwari, A.P.
Publication date: 
JEL codes: 
C12 - Hypothesis Testing: General, E31 - Price Level; Inflation; Deflation, E51 - Money Supply; Credit; Money Multipliers, H62 - Deficit; Surplus.
This study examines the linkage between fiscal deficit and inflation in India. The main objective of this study is to examine the factors that are responsible for increasing fiscal deficit in India, by taking into account all factors that can affect the status of fiscal deficit. The study finds that inflation is not at all cause of fiscal deficit. However, government expenditure and money supply are found to be important determinants of mounting fiscal deficit.
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