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Inflation Past, Present and Future : Fiscal Shocks, Fed Response, and Fiscal Limits

Cochrane, John H. - National Bureau of Economic Research - 2022

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....

Persistent link: https://www.econbiz.de/10013210124

Strategic Interactions in U.S. Monetary and Fiscal Policies

Chen, Xiaoshan - 2020

We estimate a model in which fiscal and monetary policy behavior arise from the optimizing behavior of distinct policy authorities, with potentially different welfare functions. Optimal time-consistent policy behavior fits U.S. time series at least as well as rules-based behavior. American...

Persistent link: https://www.econbiz.de/10012481395

Using Inflation to Erode the U.S. Public Debt

Aizenman, Joshua - 2009

As a share of GDP, the U.S. Federal debt held by the public exceeds 50 percent in FY2009, the highest debt ratio since 1955. Projections indicate the debt ratio may be in the 70-100 percent range within ten years. In many respects, the temptation to inflate away some of this debt burden is...

Persistent link: https://www.econbiz.de/10012463087

Central Bank Swap Arrangements in the COVID-19 Crisis

Aizenman, Joshua; Itō, Hiro; Pasricha, Gurnain Kaur - National Bureau of Economic Research - 2021

Facing acute strains in the offshore dollar funding markets during the COVID-19 crisis, the Federal Reserve (Fed) implemented measures to provide US dollar liquidity by reinforcing swap arrangements with five major central banks, reactivating them with nine other central banks and establishing a...

Persistent link: https://www.econbiz.de/10012496139

A Frictionless View of U.S. Inflation

Cochrane, John H. - 1998

Financial innovation challenges the foundations of monetary theory, and standard monetary theory has not been very … U.S. inflation using a framework that ignores monetary frictions? The fiscal theory of the price level allows us to … nominal government debt with the present value of surpluses. I describe the theory, and I argue that it is a return to pre …

Persistent link: https://www.econbiz.de/10012472164

On the Effectiveness of Foreign Exchange Reserves During the 2021-22 U.S. Monetary Tightening Cycle

Ahmed, Rashad; Aizenman, Joshua; Saadaoui, Jamel; … - National Bureau of Economic Research - 2023

This paper examines the role of foreign exchange (FX) reserves and other fundamental factors in explaining cross-country differences in foreign currency depreciation observed over the 2021-22 Federal Reserve monetary policy tightening cycle that led to a sharp appreciation of the US dollar....

Persistent link: https://www.econbiz.de/10014226132

Expectations and the Neutrality of Interest Rates

Cochrane, John H. - National Bureau of Economic Research - 2022

We finally have a complete theory of inflation under interest rate targets, that mirrors the long-run neutrality and … frictionless limit of monetary theory: Inflation can be stable and determinate under interest rate targets, including a k percent …

Persistent link: https://www.econbiz.de/10013388824

Oil Prices, Monetary Policy and Inflation Surges

Gagliardone, Luca; Gertler, Mark - National Bureau of Economic Research - 2023

We develop a simple quantitative New Keynesian model aimed at accounting for the recent sudden and persistent rise in inflation, with emphasis on the role of oil shocks and accommodative monetary policy. The model features oil as a complementary good for households and as a complementary input...

Persistent link: https://www.econbiz.de/10014287363

International Spillovers of U.S. Fiscal Challenges

Aizenman, Joshua; Eldén, William; Jinjarak, Yothin; … - National Bureau of Economic Research - 2024

Expansionary fiscal policies have increased significantly following the subprime crisis in 2007 and the COVID-19 crisis, leading to fiscal dominance concerns, where a growing share of monetary authorities may be forced to deviate from policy targets to accommodate fiscal policies. Meanwhile,...

Persistent link: https://www.econbiz.de/10015056195

Monetary Policy and Asset Price Volatility

Bernanke, Ben - 2000

We explore the implications of asset price volatility for the management of monetary policy. We show that it is …

Persistent link: https://www.econbiz.de/10012471216