000			01313pab a2200181 454500
008			180718b2000 xxu||||| |||| 00| 0 eng d
100			_aRao, M.J. Manohar
245			_aFiscal deficits, interest rates and inflation: assessment of monetisation strategy
260			_c2000
300			_ap.2637-645
362			_a22 Jul
520			_aThe relationship between budget deficits, money creation and debt financing suggests that interest rate targeting and inflation control are both monetary and fiscal policy issues. The paper formalises these links within two analytical frameworks, static as well as dynamic, which by highlighting the concepts of the `high interest trap' and the `tight money paradox', respectively, suggests that, for any given deficit, there exists optimal levels of monetisation and market borrowings. The model is then applied to evaluate the implications of the union budget 2000-01 and the results indicate that unless government borrowings are reduced substantially, and about 40 per cent of the deficit is monetised, the inflation rate as well as the interest rate could be much higher than what they fundamentally ought to be. - Reproduced
650			_aFiscal policy
650			_aInflation
650			_aInterest rates
773			_aEconomic and Political Weekly
909			_a45584
999			_c45584 _d45584