tailieunhanh - Effect of budget deficit on inflation rate in Vietnam

In recent years, Vietnam has achieved a high economic growth rate, so inflation has become a noticeable problem. The relationship between the state budget deficit and inflation is a two-way dialectical relationship. However, within the limit of this article, the authors only study the one-way relationship: the effect of budget deficit on inflation rate in Vietnam. | Hue University Journal of Science ISSN 1859-1388 Vol. 126 No. 5B 2017 pp. 117-127 EFFECT OF BUDGET DEFICIT ON INFLATION RATE IN VIETNAM Nguyen Thi Thuy Minh1 Nguyen Thi Thuy Duong2 1 HU - University of Economics 100 Phung Hung Street Hue city Vietnam 2 Phu Xuan University 28 Nguyen Tri Phuong Street Hue city Vietnam Abstract In recent years Vietnam has achieved a high economic growth rate so inflation has become a noticeable problem. The relationship between the state budget deficit and inflation is a two-way dialectical relationship. However within the limit of this article the authors only study the one-way relationship the effect of budget deficit on inflation rate in Vietnam. The prolonged budget deficit and the remediation of the state budget deficit by different methods have affected the inflation rate differently. This effect is analyzed both quantitatively and qualitatively and includes five approaches the impact of fiscal policy inflation the impact of the state budget deficit level on inflation the impact of budget deficit funding on inflation the independence of the monetary policy and its effect on inflation and the effect of public expenditure on inflation. Keywords budget deficit inflation monetary policy fiscal policy public expenditure 1 Introduction To quickly narrow the gap with other countries and avoid lagging too far behind economically the Vietnamese government has prioritized high economic growth. However this high economic growth has led to high inflation over time in Vietnam. There were many reasons causing the inflation especially when Vietnam has integrated into the world economy and the reasons stem from both the inside and the outside. Therefore finding the causes behind inflation in order to solve it has become a major concern. Together with high inflation the prolonged and persistent budget deficit would also be mentioned. The question here is How has the budget deficit affected the inflation situation in Vietnam Studying the effect .