Fiscal determinants of inflation
Subtitle: a primer for the Middle East and North Africa
By: prepared by Domenico Fanizza and Ludvig Söderling.
Contributors: Söderling, Ludvig.; International Monetary Fund. Middle East and Central Asia Dept.
Series: IMF working paper -- WP/06/216
Publisher: International Monetary Fund
Published: 2006
Place of publication: Washington, D.C
Language: eng
Number of pages: 15
Subjects: Inflation (Finance) -- Middle East; Inflation (Finance) -- Africa, North; Fiscal policy -- Africa, North; Fiscal policy -- Middle East; Debts, Public -- Africa, North; Debts, Public -- Middle East
Description: Many countries in the Middle East and North Africa (MENA) region have recently experienced surges in money growth that apparently have not generated significant inflationary pressures.  Moreover, several MENA countries have followed monetary policy rules that according to standard monetary theory should have produced macroeconomic instability and possibly hyperinflation. We argue that the Fiscal Theory of the Price Level could usefully provide insights on these developments. Our main conclusion is that a sound fiscal position constititutes a necessary condition for macroeconomic stability whereas "sound" monetary policy is neither sufficient nor necessary. Hence, fiscal policy and public debt deserve particular attention for maintaining macroeconomic stability, by and large consistent with Fund policy advice to MENA countries.
Notes: Caption title.

"October 2006."

Includes bibliographical references (p. 15).

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