supply-side effects into account, we get more persistent inflation and output reactions. We also show that the dichotomy does …, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that … commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output …

results in more persistent inflation as well as output responses to shocks, than without the supply-side channel. We also … discuss the different monetary and fiscal policy regimes and their implication on the stability of inflation and output. …

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

This paper analyses the role of inflation expectations in the euro area. On one hand, the question is how inflation … expectations affect both inflation and output, and, on the other hand, how inflation expectations reflect developments in these … variables. The analyses make use of a simple VAR model of inflation, inflation expectations and the output gap that allows for …