Benigno, Pierpaolo; Woodford, Michael - Department of Economics, School of Arts and Sciences - 2005
of government revenue exist, and fiscal policy can be relied upon to adjust so as to ensure intertemporal government … fiscal policy is purely exogenous, so that the central bank cannot rely upon fiscal policy to adjust in order to maintain … intertemporal solvency (a case emphasized in the critique of inflation targeting by Sims, 2005). We find that the fiscal policy …