Inflation and Public Debt Dynamics in ASEAN

Authors

Yuthana Sethapramote, National Institute of Development Administration, ThailandFollow
Athakrit Thepmongkol, National Institute of Development Administration, Thailand

JEL Classification System

C32, C63, E31, E52, F02, H63

Abstract

This paper studies how inflation affects the debt dynamics focusing on six ASEAN countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Using projection data, we perform simulations of debt dynamics under various inflation policies. It results that Vietnam has the highest ability of inflating debt, while the Philippines is lastly ranked. Moreover, the optimal inflation rate for each member country and also the common policy rate for ASEAN integration are calculated under additional debt management motive. We found that if the ASEAN happened to use the common inflation policy rate, Malaysia and the Philippines would not be much affected as their individual optimal rates are close to the common rate, while Indonesia and Singapore would suffer from withstanding the common inflation rate far from their own optimal levels.

Recommended Citation

Sethapramote, Yuthana and Thepmongkol, Athakrit (2018) "Inflation and Public Debt Dynamics in ASEAN," DLSU Business & Economics Review: Vol. 27: No. 2, Article 7.
DOI: https://doi.org/10.59588/2243-786X.1243
Available at: https://animorepository.dlsu.edu.ph/ber/vol27/iss2/7