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 estimates regime-switching monetary policy rules featuring trend inflation using post-WWII US data. We find … evidence in favour of regime shifts and time-variation of the inflation target. We also find a drop in the inflation gap … upon a feedback mechanism running from the monetary policy stance to the inflation gap. Our results support the stochastic …

of the two. We compare the accounting definition of deficit with the economic definition which takes inflation into …

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 …

Monetary policy transmission lags create credibility problems for the inflation-targeting policy maker who acts under …: for the period monetary policy influences output, inflation is predetermined and the best discretionary policy is to …

responsive to threats that inflation would lie outside the price stability target than to equal sized shocks within the target …. High unemployment has relatively limited effect in pulling inflation down while low unemployment can be much more effective …

-coordinated optimal fiscal policy rule government spending should react counter cyclically to the local output gap and inflation, while …