Abstract :While Tanzi effect stated that inflation increased budget deficits, the Patinkin effect shows that inflation reduces budget deficits. The aim of this study is to test which effect is valid in 28 OECD countries for the period 1995-2018. In the study, LLC, IPS, Fisher ADF and Fisher PP panel unit root tests, which are among the first generation panel unit root tests, were applied to determine the stability of the series. As a result of the analysis, it was seen that the series were stationary at the level. Since the variables are stationary at the level, the cointegration test that gives the long-term relationship did not been passed. According to the Granger causality test results; one-way causality was determined from inflation to budget deficit for the countries discussed. On the other hand, the negative relationship between inflation and budget deficits was determined in the VAR model. In addition, the effect of Patinkin was found to be valid in the study.