Bianchi, Francesco; Faccini, Renato; Melosi, Leonardo - 2023
We develop a new class of general equilibrium models with partially unfunded debt to propose a fiscal theory of … stabilizes debt. However, the central bank accommodates unfunded fiscal shocks, causing persistent movements in inflation, output …. In the aftermath of the pandemic, unfunded fiscal shocks sustain the recovery, but also cause a persistent increase in …