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This paper describes methodological issues pertaining to measurement of fiscal impact. The fiscal deficit is, under any circumstances, a crude tool for assessing the impact of fiscal policy on the economy. This paper also analyzes various ways in which the conventional definition of the fiscal deficit is affected by high rates of inflation. It has shown that, as the rate of inflation rises, the picture emerging from the conventional measure may, under certain circumstances, become somewhat blurred since the conventional measure may magnify the size of the fiscal adjustment that a country need. In fact, the size of the debt service that compensates bondholders for the reduction in the real value of their assets arising from inflation should be made explicit so as to indicate that part of the deficit whose impact depends mainly on portfolio decisions regarding the public's demand for government bonds, and on the potential effects of these bonds on the monetary and liquidity conditions of the economy.

Budget deficits. --- Debts, Public. --- Expenditures, Public --- Inflation (Finance) --- Fiscal policy --- Finance, Public --- Effect of inflation on. --- Accounting. --- Government accounting --- Governmental accounting --- Public accounting --- Tax policy --- Taxation --- Economic policy --- Finance --- Natural rate of unemployment --- Inflation (Finance) and public expenditures --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Deficits, Budget --- Budget --- Government policy --- Banks and Banking --- Exports and Imports --- Inflation --- Macroeconomics --- Public Finance --- Money and Monetary Policy --- International Lending and Debt Problems --- Debt Management --- Sovereign Debt --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- National Government Expenditures and Related Policies: General --- International economics --- Public finance & taxation --- Banking --- Monetary economics --- Arrears --- Government debt management --- Loans --- External debt --- Public financial management (PFM) --- Prices --- Expenditure --- Financial institutions --- Debts, External --- Debts, Public --- Debt service --- United States