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 …

This paper studies the implications of central bank credibility for long-run inflation and inflation dynamics. We … competitive firms. Inflation is driven by the interaction of lack of commitment and the economic environment. We show that long …-run inflation increases following an unanticipated permanent increase in the labor wedge or decrease in the elasticity of …

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 …

inflation to monetary policy …

adapt its monetary policy rule to the fiscal stance to guarantee that inflation remains at its target. There is, however, a … minimum level of debt below which the steady-state inflation deviates from its target due to the zero lower bound on nominal …

inflation during the first quarter of the 21st century, yielding important insights for central banking. Price stability has … involves a credible commitment to a nominal anchor with a strong response to inflation and pre-emptive leaning against an … them to stabilize both inflation and economic activity …

expected inflation. Such nominally sticky discount rates imply that increases in expected inflation directly lower firms' real … shocks and higher investment in response to government spending. Sticky discount rates imply that inflation has real effects … inflation expectations and permanently lowers the long-run inflation target in response to expansionary shocks, even when shocks …