Inflation and public finances: an overview
https://doi.org/10.3326/pse.47.4.2 | Published online: December 11, 2023 Graph 1
Changes in annual revenue and expenditure/GDP, 1992–2023 (in percentage points) Graph 2
Trends in tax structure in OECD countries (in per cent of total tax revenue) Source: OECD (2023). Graph 3
Estimated cost of energy measures in the EU (as a percentage of GDP) Graph 4
Fiscal policy support and core inflation, 2020–22 Horizontal axis: additional spending or foregone revenue between March 2020 and September 2021, as a percent of GDP. Based on national authorities and IMF staff estimates. Includes temporary support measures for households and firms and temporary tax reductions (e.g. lower social security contributions and VAT reductions for specific sectors severely hit by the pandemic). Vertical axis: change in annual average year-on-year core inflation between 2020 and 2022, in percentage points. Sources: IMF (2021); OECD (2023); author’s calculations. Table 1
Structure of government expenditure, as a percentage of GDP, period averages
1 Initial observations vary across countries. 2 Median values for small open economies (Denmark, Norway, Switzerland and Sweden) and EMEs (Chile, Korea, Poland and South Africa). Sources: OECD (2023); author`s calculations.
Graph 5
High nominal GDP growth lowers public debt ratios Graph 6
Monetary tightening and primary fiscal surpluses 1 Distribution of primary balances during episodes of monetary tightening. Based on data for 20 advanced economies since 1970. 2 Median across countries, during the last year of monetary tightening and the two subsequent years. Sources: Boissay et al. (2023); Mauro et al. (2015); IMF (2023a); national data; BIS.Graph 7
High public debt leads to larger yield and CDS increases when policy rates rise (in percentage points) 1 Note: AEs = advanced economies; EMEs = emerging market economies. 1 Dots correspond to point estimates and bars to +/- two standard deviations around these estimates. Sources: Bloomberg; IHS Markit; Refinitiv Datastream; national data; BIS. Graph A1
Gross public debt and gross interest payments in advanced economies, as a percentage of GDP1 Sources: OECD, Economic Outlook; BIS. Graph 1 Changes in annual revenue and expenditure/GDP, 1992–2023 (in percentage points) DISPLAY Graph Graph 2 Trends in tax structure in OECD countries (in per cent of total tax revenue) DISPLAY Graph Graph 3 Estimated cost of energy measures in the EU (as a percentage of GDP) DISPLAY Graph Graph 4 Fiscal policy support and core inflation, 2020–22 DISPLAY Graph Table 1 Structure of government expenditure, as a percentage of GDP, period averages DISPLAY Table Graph 5 High nominal GDP growth lowers public debt ratios DISPLAY Graph Graph 6 Monetary tightening and primary fiscal surpluses DISPLAY Graph Graph 7 High public debt leads to larger yield and CDS increases when policy rates rise (in percentage points) 1 DISPLAY Graph Graph A1 Gross public debt and gross interest payments in advanced economies, as a percentage of GDP1 DISPLAY Graph |
December, 2023 IV/2023 |
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1977