We show that optimal monetary and fiscal policies are time consistent for a class of economies often used in applied work, economies appealing because they are consistent with the growth facts. We establish our results in two steps. We first show that for this class of economies, the Friedman...

This paper examines how the scale and composition of public debt can affect economies that implement a combination of “passive” monetary policy and “active” fiscal policy. This policy configuration is argued to be of both historical and contemporary interest in the cases of the U.S. and...

Remarks at Queens Chamber of Commerce and Queens Economic Development Corporation, Flushing, New York City.

Remarks before the Bronx Chamber of Commerce at the New York Botanical Garden, Bronx, New York.

Remarks at the National Association for Business Economics Annual Meeting, New York City.

Remarks at New York University's Stern School of Business, New York City.

Remarks at Fordham University's Gabelli School of Business, Bronx, New York.

Remarks at Panel Discussion at 2012 U.S. Monetary Policy Forum, New York City.

Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under commitment the Friedman rule of setting nominal interest rates to zero is optimal. This result is of applied interest because the Friedman rule is optimal for the standard preferences...

We consider the desirability of modifying a standard Taylor rule for a central bank's interest rate policy to incorporate either an adjustment for changes in interest rate spreads (as proposed by Taylor [2008] and McCulley and Toloui [2008]) or a response to variations in the aggregate volume of...