August 6, 2025

When Debt Turns Inflationary: Threshold Effects in the Debt-Inflation Nexus

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Analysis reveals critical debt thresholds influence inflation in diverse regions, suggesting policy actions for emerging markets.

Main finding indicates a non-linear relationship between debt and inflation, highlighting critical thresholds.
Debt-to-GDP thresholds vary regionally, from 76% in Emerging Asia to 92% in the Euro Area.
Methods include Discrete Panel Threshold Regression and Panel Vector Autoregressive models for robust analysis.
Results stress the need for sustainable public debt levels to mitigate inflationary risks in developing economies.

El-Waleed Ahmed Talha (2025) studied this question.

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