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Perceptions and Misperceptions of Fiscal Inflation

Leeper, Eric; Walker, Todd B. - National Bureau of Economic Research (NBER) - 2012

The Great Recession and worldwide financial crisis have exploded fiscal imbalances and brought fiscal policy and inflation to the forefront of policy concerns. Those concerns will only grow as aging populations increase demands on government expenditures in coming decades. It is widely perceived...

Persistent link: https://www.econbiz.de/10009654186

Uncertain Fiscal Consolidations

Leeper, Eric; Bi, Huixin; Leith, Campbell B. - National Bureau of Economic Research (NBER) - 2012

The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition are uncertain. Drawing on the evidence in Alesina and Ardagna (2010), we emphasize whether or not the fiscal consolidation is driven by tax rises or expenditure cuts. We find that the...

Persistent link: https://www.econbiz.de/10009493268

Reply to "Generalizing the Taylor Principle: A Comment"

Davig, Troy; Leeper, Eric - National Bureau of Economic Research (NBER) - 2009

Farmer, Waggoner, and Zha (2009) show that a new Keynesian model with a regime-switching monetary policy rule can support multiple solutions that depend only on the fundamental shocks in the model. Their note appears to find solutions in regions of the parameter space where there should be no...

Persistent link: https://www.econbiz.de/10004991267

Monetary-Fiscal Policy Interactions and Fiscal Stimulus

Davig, Troy; Leeper, Eric - National Bureau of Economic Research (NBER) - 2009

Increases in government spending trigger substitution effects--both inter- and intra-temporal--and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy...

Persistent link: https://www.econbiz.de/10005040646

Toward a Modern Macroeconomic Model Usable for Policy Analysis

Leeper, Eric; Sims, Christopher - National Bureau of Economic Research (NBER) - 1994

This paper presents a macroeconomic model that is both a completely specified dynamic general equilibrium model and a probabilistic model for time series data. We view the model as a potential competitor to existing ISLM-based models that continue to be used for actual policy analysis. Our...

Persistent link: https://www.econbiz.de/10005710846

Modest Policy Interventions

Leeper, Eric; Zha, Tao - National Bureau of Economic Research (NBER) - 2002

We present a framework for computing and evaluating linear projections of macro variables conditional on hypothetical paths of monetary policy. A modest policy intervention is a change in policy that does not significantly shift agents' beliefs about policy regime and does not generate...

Persistent link: https://www.econbiz.de/10005714073

Generalizing the Taylor Principle

Davig, Troy; Leeper, Eric - National Bureau of Economic Research (NBER) - 2005

The paper generalizes the Taylor principle---the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation---to an environment in which reaction coefficients in the monetary policy rule evolve...

Persistent link: https://www.econbiz.de/10005089004

Endogenous Monetary Policy Regime Change

Davig, Troy; Leeper, Eric - National Bureau of Economic Research (NBER) - 2006

This paper makes changes in monetary policy rules (or regimes) endogenous. Changes are triggered when certain endogenous variables cross specified thresholds. Rational expectations equilibria are examined in three models of threshold switching to illustrate that (i) expectations formation...

Persistent link: https://www.econbiz.de/10005089295

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

Leeper, Eric; Yun, Tack - National Bureau of Economic Research (NBER) - 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/10005049984

Empirical Analysis of Policy Interventions

Leeper, Eric; Zha, Tao - National Bureau of Economic Research (NBER) - 2002

We construct linear projections of macro variables conditional on hypothetical paths of monetary policy, using as an example an identified VAR model. Hypothetical policies are restricted to ones where both the policy intervention and its impacts are consistent with history -- otherwise the...

Persistent link: https://www.econbiz.de/10005050088