taxation, modest inflation, and some reneging on the government's promised transfers. In the equilibrium, inflation …-targeting monetary policy cannot successfully anchor expected inflation. Expectational effects are always present, but need not have … large impacts on inflation and interest rates in the short and medium runs …

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 …