An empirical analysis of the Granger causality between the public debt and the level of inflation in selected European countries in the period 1990-2022
DOI:
https://doi.org/10.24136/ceref.2023.029Keywords:
public debt, inflation, Granger causalityAbstract
While growing debt is not a problem for governments in the environment of low interest rates, such a high level of inflation, which makes debt servicing easier, may have a number of unfavorable consequences. The aim of this article is to verify the existence of causal relationships between the amount of public debt and the inflation level of selected countries. The conducted empirical study is based on the concept of Granger causality, which is one of the possible methods for examining interdependencies. The results of the study proved the occurrence of statistically significant granger causality in both groups of countries, i.e. those characterized by both high and low levels of debt.
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