In HANK models, fiscal deficits drive aggregate demand and thus inflation because households are non-Ricardian; in the … mapping from deficits to inflation in HANK is robust to active monetary policy and free of the controversies surrounding the … inflation as the FTPL. This is true even in the simplest FTPL scenario, in which deficits are financed entirely by inflation and …

policy will temporarily aid debt sustainability through a temporary burst in inflation. The anticipation of a possible reform … links debt levels with inflation expectations. As a result, interest rates have two effects: they influence demand and … affect expected inflation in opposite directions. The expectations effect is linked to the impact of interest rates on public …

economic growth. This paper examines the roles of three other factors: primary budget surpluses, surprise inflation, and pegged … inflation and the pre-Accord peg. In this counterfactual, debt/GDP declines only to 74% in 1974, not 23% as in actual history …

-expected inflation can lower the real value of outstanding government debt. Looking forward, we derive a formula for the debt burden that …-adjusted probability distributions for inflation at different horizons. The estimates suggest that it is unlikely that inflation will lower … the US fiscal burden significantly, and that the effect of higher inflation is modest for plausible counterfactuals. If …

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 …

We propose a continuous time model of nominal debt and investigate the role of inflation credibility in the potential … for self-fulfilling debt crises. Inflation is costly, but reduces the real value of outstanding debt without the full … punishment of default. With high inflation credibility, which can be interpreted as joining a monetary union or issuing foreign …

policies will adjust. Temporarily explosive debt has no effect on inflation if households expect all adjustments to occur … targeting inflation to stabilizing debt, then debt feeds directly into the path of inflation and monetary policy can no longer … control inflation. News that reduces expected primary surpluses can bring future inflation into the present, well before the …