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Endogenous Monetary Policy Regime Change
Davig, Troy - 2006
This paper makes changes in monetary policy rules (or regimes) endogenous. Changes are triggered when certain endogenous variables cross specified thresholds. Rational expectations equilibria are examined in three models of threshold switching to illustrate that (i) expectations formation...
Persistent link: https://www.econbiz.de/10012466260
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Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy
Leeper, Eric M. - 2019
The textbook optimal policy response to an increase in government debt is simple--monetary policy should actively target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions presuppose an ability to commit. Without that ability, the...
Persistent link: https://www.econbiz.de/10012479609
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Temporarily Unstable Government Debt and Inflation
Davig, Troy - 2011
Many advanced economies are heading into an era of fiscal stress: populations are aging and governments have made substantially more promises of old-age benefits than they have made provisions to finance. This paper models the era of fiscal stress as stemming from relentlessly growing promised...
Persistent link: https://www.econbiz.de/10012461858
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Reply to "Generalizing the Taylor Principle : A Comment"
Davig, Troy - 2009
" parameters that govern behavior and the parameters that govern the exogenous shock processes, and making it difficult to ascribe …
Persistent link: https://www.econbiz.de/10012463729
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Generalizing the Taylor Principle
Davig, Troy - 2005
The paper generalizes the Taylor principle---the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation---to an environment in which reaction coefficients in the monetary policy rule evolve...
Persistent link: https://www.econbiz.de/10012466797
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Monetary-Fiscal Policy Interactions and the Price Level : Background and Beyond
Leeper, Eric M. - 2005
The paper presents the fiscal theory of the price level in a variety of models, including endowment economies with lump …-sum taxes and production economies with proportional income taxes. We offer a microeconomic perspective on the fiscal theory by … level. Under certain assumptions on monetary and fiscal behavior, the revaluation effect reflects the fiscal theory …
Persistent link: https://www.econbiz.de/10012467030
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Fluctuating Macro Policies and the Fiscal Theory
Davig, Troy - 2005
articulated by the fiscal theory of the price level. The paper quantifies that mechanism and finds it to be important in U.S. data …
Persistent link: https://www.econbiz.de/10012467473
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Monetary and Fiscal Policy Switching
Davig, Troy - 2004
A growing body of evidence finds that policy reaction functions vary substantially over different periods in the United States. This paper explores how moving to an environment in which monetary and fiscal regimes evolve according to a Markov process can change the impacts of policy shocks. In...
Persistent link: https://www.econbiz.de/10012468331
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Should Central Banks Care About Fiscal Rules?
Leeper, Eric M. - 2016
This essay aims to explain the nature of monetary and fiscal policy interactions and how those interactions could inform the fiscal rules that countries choose to follow. It makes two points: (1) monetary policy control of inflation requires appropriate fiscal backing; (2) European fiscal...
Persistent link: https://www.econbiz.de/10012455880
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Understanding Inflation as a Joint Monetary-Fiscal Phenomenon
Leeper, Eric M. - 2016
We develop the theory of price-level determination in a range of models using both ad hoc policy rules and jointly …
Persistent link: https://www.econbiz.de/10012456805