a burst of inflation that devalues the existing nominal debt stock. The probability of this outcome places upward … pressure on inflation expectations and poses a substantial challenge to a central bank pursuing an inflation target. The … distribution of outcomes for the path of future inflation has a fat right tail, revealing that only a small set of outcomes imply …

current and future inflation innovations to revalue government debt, reducing reliance on distorting taxes; (2) the role of … inflation in optimal fiscal financing increases with the average maturity of government debt; (3) as average maturity rises, it … is optimal to tradeoff inflation for output stabilization; (4) inflation is relatively more important as a fiscal shock …

target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions … presuppose an ability to commit. Without that ability, the temptation to use inflation surprises to offset monopoly and tax … debt levels and short-term debt exacerbate the inflation bias. But this produces a debt stabilization bias because the …

policy mix been in place, American might have avoided the Great Inflation. Enhancing cooperation between policy makers …

in light of this reasoning, bringing recent Swedish inflation and interest-rate developments to bear on the …

inform the fiscal rules that countries choose to follow. It makes two points: (1) monetary policy control of inflation …

interpret data. When monetary policy actively targets inflation, output multipliers can exceed one, but investment multipliers …

control inflation and influence the economy in the usual ways. The paper discusses models of fiscal limits and their …