incomplete markets where the government issues bonds of maturity N > 1. Assuming the existence of long bonds introduces an … because of the promises made to cut future taxes. The longer the maturity of bonds the more promises need to be monitored and …

This paper uses a DSGE model to examine the effects of an expansion in government spending in a liquidity trap. The … spending multiplier can be much larger than in the normal situation if the liquidity trap is very prolonged, and the budgetary … expansion. Our paper addresses this question in a model environment where the duration of the liquidity trap is determined …

fiscal theory fails when at least part of the public debt takes the form of securities of infinite maturity. Indeed, no …The fiscal theory of the price level asserts that the price level is determined by the ratio of outstanding public …

, control of inflation and control over the growth of national wealth, and a third outcome of importance, a high level of …). The assignment problem considers whether fiscal policy should be used to control inflation, leaving monetary policy to …

compares the Federal Reserve’s actions with the literature on optimal policy in a liquidity trap. This comparison suggests that … policy has been in the direction indicated by theory, but it has not gone far enough. To interpret quantitative policy, the … paper reviews the determination of inflation under different policy regimes. The main danger for inflation from current …