What are the effects of a higher central bank inflation target on the burden of real public debt? Several recent proposals have suggested that even a moderate increase in the inflation target can have a pronounced effect on real public debt. We consider this question in a New Keynesian model with a maturity structure of public debt and an imperfectly observed inflation target. We find that moderate changes in the inflation target only have significant effects on real public debt if they are essentially permanent. Moreover, the additional benefits of not communicating a change in the inflation target are minor.

This scatter chart displays inflation (annual %) against central government debt (% of GDP) in St. Kitts and Nevis. The data is about countries per year.

This scatter chart displays central government debt (% of GDP) against inflation (annual %) in Germany. The data is about countries per year.

Brazil Federal Public Debt: Inflation Linked data was reported at 1,113.273 BRL bn in Apr 2019. This records an increase from the previous number of 1,097.484 BRL bn for Mar 2019. Brazil Federal Public Debt: Inflation Linked data is updated monthly, averaging 509.944 BRL bn from Jan 2004 (Median) to Apr 2019, with 184 observations. The data reached an all-time high of 1,113.273 BRL bn in Apr 2019 and a record low of 99.886 BRL bn in Jan 2004. Brazil Federal Public Debt: Inflation Linked data remains active status in CEIC and is reported by National Treasury Secretariat. The data is categorized under Brazil Premium Database’s Government and Public Finance – Table BR.FC001: Federal Public Debt: Held by the Public. This data is part of the Monthly Report of Federal Public Debt from National Treasury. Displays information about emissions, redemptions, stock, maturity profile and average cost to the Federal Public Debt, including both the internal and external debts, responsibility of the National Treasury market.

This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919-1923, we show that inflation led to a large reduction in real debt burdens and bankruptcies. Firms with higher nominal liabilities at the onset of inflation experienced a larger decline in interest expenses, a relative increase in their equity values, and higher employment during the inflation. The results are consistent with real effects of a debt-inflation channel that operates even when prices and wages are flexible.

Abstract of associated article: Increasing the independence of a central bank from political influence, although ex-ante socially beneficial and initially successful in reducing inflation, would ultimately fail to lower inflation permanently. The smaller anticipated policy distortions implemented by a more independent central bank would induce the fiscal authority to decrease current distortions by increasing the deficit. Over time, inflation would increase to accommodate a higher public debt. By contrast, imposing a strict inflation target would lower inflation permanently and insulate the primary deficit from political distortions.

United States Federal Debt: PDS: Marketable: T Inflation Protected Securities data was reported at 1,382.288 USD bn in Oct 2018. This records an increase from the previous number of 1,376.426 USD bn for Sep 2018. United States Federal Debt: PDS: Marketable: T Inflation Protected Securities data is updated monthly, averaging 693.766 USD bn from Jun 2004 (Median) to Oct 2018, with 173 observations. The data reached an all-time high of 1,382.288 USD bn in Oct 2018 and a record low of 200.391 USD bn in Jun 2004. United States Federal Debt: PDS: Marketable: T Inflation Protected Securities data remains active status in CEIC and is reported by Bureau of the Fiscal Service. The data is categorized under Global Database’s United States – Table US.F004: Federal Debt.

In 2024, Japan had an average inflation rate estimated at 2.74 percent, marking the highest rate of inflation in Japan in almost a decade. However, this figure was still very low compared to most other major economies, such as Japan's fellow G7 members, four of which had inflation rates around six or seven percent in 2023 due to the global inflation crisis. Why is Japan's inflation rate lower? There are a number of contributing factors to Japan's relatively low inflation rate, even during economic crises. Japan eased its Covid restrictions more slowly than most other major economies, this prevented post-pandemic consumer spending that may have driven inflation through supply chain issues caused by higher demand. As the majority of Japan's food and energy comes from overseas, and has done so for decades, the government has mechanisms in place to prevent energy and wheat prices from rising too quickly. Because of this, Japan was able to shield its private sector from many of the negative knock on effects from Russia's invasion of Ukraine, which had a significant impact on both sectors globally. Persistent deflation and national debt An additional factor that has eased the impact of inflation on Japan's economy is the fact that it experienced deflation before the pandemic. Deflation has been a persistent problem in Japan since the asset price bubble burst in 1992, and has been symptomatic of Japan's staggering national debt thereafter. For almost 30 years, a combination of quantitative easing, low interest rates (below 0.5 percent since 1995, and at -0.1% since 2016), and a lack of spending due to low wages and an aging population have combined to give Japan the highest national debt in the world in absolute terms, and second-highest debt in relation to its GDP, after Venezuela. Despite this soaring debt, Japan remains the fourth-largest economy in the world, behind the U.S., China, and Germany.

Graph and download economic data for Federal Debt: Total Public Debt (GFDEBTN) from Q1 1966 to Q1 2025 about public, debt, federal, government, and USA.

Inflation in Argentina was 54 percent in 2019, before falling to 42 percent in 2020. Despite Argentina's fluctuating economic instability over the twentieth century, the largest factor in its current economic status is the legacy of poor fiscal discipline left by the economic depression from 1998 to 2002. Although data is not available from 2014 to 2016, Argentina's inflation rate has been among the highest in the world for the past five years.

What causes inflation?

Inflation is a rise in price levels for all goods. Major causes of inflation include an increase in money supply, low central bank interest rates, and expectation of inflation. In a country such as Argentina, the expectation can be one of the biggest obstacles. People expect inflation to be high and demand increasing wages, and firms continue raising prices because they expect the costs of inputs to increase. Banks follow suit, charging high interest rates on fixed deposits.

Effects of inflation

Inflation negatively affects savers. 100 Argentinian pesos in 2018 was worth just under 75 pesos in 2019, after adjusting for the 34 percent inflation rate. Similarly, frequently changing prices has its own inherent cost, called “menu cost” after the price of printing new menus. Inflation will also have a positive effect on national debt when that debt is denominated in Argentinian pesos, because the pesos will be cheaper when the loan matures. However, the majority of Argentina’s debts are in foreign currency, which means that inflation will make these debts larger in peso terms.

The United States recorded a Government Debt to GDP of 124.30 percent of the country's Gross Domestic Product in 2024. This dataset provides - United States Government Debt To GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Sweden Central Govt Debt: Treasury Bonds: ow Inflation Linked Bonds data was reported at 209,874.000 SEK mn in Oct 2018. This records an increase from the previous number of 208,132.000 SEK mn for Sep 2018. Sweden Central Govt Debt: Treasury Bonds: ow Inflation Linked Bonds data is updated monthly, averaging 0.000 SEK mn from Jan 1970 (Median) to Oct 2018, with 586 observations. The data reached an all-time high of 227,047.000 SEK mn in Sep 2008 and a record low of 0.000 SEK mn in Dec 1994. Sweden Central Govt Debt: Treasury Bonds: ow Inflation Linked Bonds data remains active status in CEIC and is reported by Statistics Sweden. The data is categorized under Global Database’s Sweden – Table SE.F011: Central Government Debt: Statistics Sweden.

United States Public Debt Transactions: Issues: Marketable: Inflation Securities data was reported at 146.000 USD mn in 14 May 2025. This records a decrease from the previous number of 147.000 USD mn for 13 May 2025. United States Public Debt Transactions: Issues: Marketable: Inflation Securities data is updated daily, averaging 102.000 USD mn from Oct 2005 (Median) to 14 May 2025, with 4915 observations. The data reached an all-time high of 3.584 USD bn in 31 May 2022 and a record low of -992.000 USD mn in 15 Jun 2020. United States Public Debt Transactions: Issues: Marketable: Inflation Securities data remains active status in CEIC and is reported by Bureau of the Fiscal Service. The data is categorized under Global Database’s United States – Table US.F: Public Debt Transactions.

Households Debt in the United States decreased to 69.20 percent of GDP in the fourth quarter of 2024 from 70.50 percent of GDP in the third quarter of 2024. This dataset provides - United States Households Debt To Gdp- actual values, historical data, forecast, chart, statistics, economic calendar and news.

For more than half of Canadians interviewed by the Leger Institute in March 2022, inflation had an impact on household debt. Conversely, according to *** person in ****, this phenomenon had no impact on their household debt. At the end of 2021, the cost of living and inflation were the first things Canadians mentioned when asked what the next government's priority should be.

This scatter chart displays inflation (annual %) against central government debt (% of GDP) in Japan. The data is about countries per year.

Graph and download economic data for Gross Federal Debt as Percent of Gross Domestic Product (GFDGDPA188S) from 1939 to 2023 about gross, debt, federal, GDP, and USA.

Global public debt increased steadily since 2010, almost doubling from 2010 to 2023. Global public debt in the United States alone stood at ** trillion dollars. The rising global public debt is driven by increasing inflation and slowing economic growth.

Sweden Central Govt Debt: NI: Inflation Linked: Inflation-Linked Bonds data was reported at 182,767.340 SEK mn in Nov 2018. This records an increase from the previous number of 182,339.340 SEK mn for Oct 2018. Sweden Central Govt Debt: NI: Inflation Linked: Inflation-Linked Bonds data is updated monthly, averaging 187,767.074 SEK mn from Aug 2004 (Median) to Nov 2018, with 172 observations. The data reached an all-time high of 226,661.877 SEK mn in Sep 2008 and a record low of 161,567.290 SEK mn in Dec 2012. Sweden Central Govt Debt: NI: Inflation Linked: Inflation-Linked Bonds data remains active status in CEIC and is reported by Swedish National Debt Office. The data is categorized under Global Database’s Sweden – Table SE.F012: Central Government Debt: Swedish National Debt Office.

Brazil Federal Public Debt: Domestic: Maturities: Inflation Linked: Over 5 years data was reported at 462.537 BRL bn in Apr 2019. This records an increase from the previous number of 453.051 BRL bn for Mar 2019. Brazil Federal Public Debt: Domestic: Maturities: Inflation Linked: Over 5 years data is updated monthly, averaging 157.284 BRL bn from Dec 1999 (Median) to Apr 2019, with 233 observations. The data reached an all-time high of 522.456 BRL bn in Jul 2017 and a record low of 11.640 BRL bn in Nov 2000. Brazil Federal Public Debt: Domestic: Maturities: Inflation Linked: Over 5 years data remains active status in CEIC and is reported by National Treasury Secretariat. The data is categorized under Brazil Premium Database’s Government and Public Finance – Table BR.FC011: Federal Public Debt: Held by the Public: Domestic: by Maturities: Indexing Factor. This data is part of the Monthly Report of Federal Public Debt from National Treasury. Displays information about emissions, redemptions, stock, maturity profile and average cost to the Federal Public Debt, including both the internal and external debts, responsibility of the National Treasury market.