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Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy

Leeper, Eric M. - 2019

The textbook optimal policy response to an increase in government debt is simple--monetary policy should actively target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions presuppose an ability to commit. Without that ability, the...

Persistent link: https://www.econbiz.de/10012479609

Anchoring Fiscal Expectations

Leeper, Eric M. - 2009

In this lecture, I argue that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary...

Persistent link: https://www.econbiz.de/10012463382

Fiscal Foresight and Information Flows

Leeper, Eric M. - 2009

Fiscal foresight -- the phenomenon that legislative and implementation lags ensure that private agents receive clear signals about the tax rates they face in the future -- is intrinsic to the tax policy process. This paper develops an analytical framework to study the econometric implications of...

Persistent link: https://www.econbiz.de/10012463990

What Has Financed Government Debt?

Chung, Hess - 2007

Dynamic rational expectations models imply that the real value of debt in the hands of the public must be equal to the expected present-value of surpluses. We impose this equilibrium condition on an identified VAR and characterize the way in which the present-value support of debt varies across...

Persistent link: https://www.econbiz.de/10012465224

Monetary-Fiscal Policy Interactions and the Price Level : Background and Beyond

Leeper, Eric M. - 2005

The paper presents the fiscal theory of the price level in a variety of models, including endowment economies with lump …-sum taxes and production economies with proportional income taxes. We offer a microeconomic perspective on the fiscal theory by … level. Under certain assumptions on monetary and fiscal behavior, the revaluation effect reflects the fiscal theory …

Persistent link: https://www.econbiz.de/10012467030

Fluctuating Macro Policies and the Fiscal Theory

Davig, Troy - 2005

articulated by the fiscal theory of the price level. The paper quantifies that mechanism and finds it to be important in U.S. data …

Persistent link: https://www.econbiz.de/10012467473

Monetary and Fiscal Policy Switching

Davig, Troy - 2004

A growing body of evidence finds that policy reaction functions vary substantially over different periods in the United States. This paper explores how moving to an environment in which monetary and fiscal regimes evolve according to a Markov process can change the impacts of policy shocks. In...

Persistent link: https://www.econbiz.de/10012468331

Should Central Banks Care About Fiscal Rules?

Leeper, Eric M. - 2016

This essay aims to explain the nature of monetary and fiscal policy interactions and how those interactions could inform the fiscal rules that countries choose to follow. It makes two points: (1) monetary policy control of inflation requires appropriate fiscal backing; (2) European fiscal...

Persistent link: https://www.econbiz.de/10012455880

Understanding Inflation as a Joint Monetary-Fiscal Phenomenon

Leeper, Eric M. - 2016

We develop the theory of price-level determination in a range of models using both ad hoc policy rules and jointly …

Persistent link: https://www.econbiz.de/10012456805

Inflation's Role in Optimal Monetary-Fiscal Policy

Leeper, Eric M. - 2013

We study how the maturity structure of nominal government debt affects optimal monetary and fiscal policy decisions and equilibrium outcomes in the presence of distortionary taxes and sticky prices. Key findings are: (1) there is always a role for current and future inflation innovations to...

Persistent link: https://www.econbiz.de/10012458976