optimise. Under discretionary monetary policy the size of the inflation bias depends on the fiscal policy regime. Using the … with the alternative fiscal policy rules, and inflation and output persistence reflects the economic data. With the deficit …

supply-side effects into account, we get more persistent inflation and output reactions. We also show that the dichotomy does …, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that … commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output …

contrast, shocks to inflation and the debt ratio itself played in most cases only a minor role. However, the inflation shocks … were vital in initiating the public debt problems, as the increase in actual inflation, and particularly the persistence of … high inflation expectations in the 1980s, led to a prolonged period of high real interest rates. Learning the implications …

-coordinated optimal fiscal policy rule government spending should react counter cyclically to the local output gap and inflation, while …