Well before the global financial crisis, the long-term trend in fiscal policy had raised concerns about risks for the outcomes of monetary policy. Are fears of an unpleasant monetarist arithmetic justified? To provide some insights, this paper examines strategic fiscal-monetary interactions in a...

The aftermath of the Global financial crisis has seen two types of monetary policy concerns. Some economists (e.g. Paul Krugman) worry primarily about possible deflation caused by a secular stagnation. In contrast, others (e.g. John Taylor) worry about excessively high inflation caused by...

The fiscal position of many countries is worrying - and getting worse. Should formally independent central bankers be concerned that observed fiscal excesses spill over to monetary policy, and jeopardize price stability? To provide some insights this paper tracks the interactions between fiscal...

The paper models monetary-fiscal interactions in the aftermath of an economic downturn and presence of fiscal stress. It focuses on the strategic aspect of the interaction between the central bank and the government that features both a conflict and a coordination problem in line with Sargent...

The fiscal position of many countries is worrying - and getting worse. Should formally independent central bankers be concerned about observed fiscal excesses spilling over to monetary policy and jeopardizing price stability? To provide some insights, this paper tracks the interactions between...