optimality of the Friedman rule in heterogeneous-agent economies. In the three models, zero inflation and zero nominal interest …

. Under discretionary monetary policy the size of the inflation bias depends on the fiscal policy regime. Using the timeless … alternative fiscal policy rules, and inflation and output persistence reflects the economic data. With the deficit rules, the …

This paper investigates the question of whether a transition to a low-inflation environment, induced by a shift in … previous empirical work in that we pay particular attention to the identification of changes in the inflation environment, we … to 2001, we find evidence in support of the hypothesis that exchange rate pass-through declines with a shift to a low-inflation …

inflation but also on the measure of inflation included in the rule and on whether the flexible-price good and the sticky …-price good are Edgeworth complements, substitutes or utility separable. We consider three possible measures of inflation: the … flexible-price inflation, the sticky price inflation and the core inflation; and we analyze three different types of rules: a …

contribute much to aggregate fluctuations. Capital gains taxes are important when there are persistent changes in the inflation … rate. Money growth shocks do not cause persistence changes in inflation when the central bank uses a money growth rule … inflation, raising both the nominal value of capital and the effective marginal capital gains tax rate. …

of severe hyperinflation. Simulations provide ample evidence that if equilibrium in the model exists, then the inflation … rate converges to the low inflation rational expectations equilibrium. This suggests a classical result: a permanent … increase in the government deficit raises the stationary inflation rate (Marcet and Sargent, 1989) …

of the importance of keeping inflation expectations under control. We illustrate with an application to a regime change … process to become unhinged. However, before inflation expectations (and actual inflation) spirals out of control, we assume … delivers less inflation and output gap volatility. It does so by anchoring inflation expectations thereby contributing to the …