Our current inflation stemmed from a fiscal shock. The Fed is slow to react. Why? Will the Fed's slow reaction spur … more inflation? I write a simple model that encompasses the Fed's mild projections and its slow reaction, and traditional … views that inflation will surge without swift rate rises. The key question is whether expectations are forward looking or …

The fiscal theory states that inflation adjusts so that the real value of government debt equals the present value of … determines the path of expected inflation, while news about the present value of surpluses drives unexpected inflation. I use … fiscal theory to interpret historical episodes, including the rise and fall of inflation in the 1970s and 1980s, the long …

accumulated debt, but surpluses do not respond to arbitrary unexpected inflation and deflation, so fiscal policy remains active …

recession of 2008-2009, to think about fiscal pressures on US inflation, and what sequence of events might surround such an … inflation. I emphasize that a fiscal inflation can come well before large deficits or monetization are realized, and is likely …

debt matters. For example, it determines whether news of future deficits implies current inflation or future inflation …. When long term debt is present, the government can trade current inflation for future inflation by debt operations; this … variance of inflation. I find cases in which long-term debt helps to stabilize inflation, and I find that the optimal inflation …

thereby affect inflation, with no change in fiscal surpluses. The same basic mechanism describes interest rate targets … frictions. In the presence of long-term debt, higher interest rates lead to temporarily lower inflation, a challenging sign. I …

determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy … can peg the nominal rate, and determine expected inflation. With sticky prices, monetary policy can also affect real … interest rates and output, though higher interest rates raise output and then inflation. The conventional sign requires a …