free float, an independent monetary authority and inflation targeting yields an outcome that mimics the price stabilization … authority and inflation targeting, would be Pareto-improving when compared to harder regimes. …

inflation stabilization. Unstable dynamics can occur when the CB is aggressively raising the interest rate in response to higher … expected inflation. The constraint on stabilizing interest rate policy is tighter the higher the primary deficit and the more … policy to be accommodating (passive). Inflation stabilization is nevertheless feasible if the CB uses an instrument not …

the presence of sovereign default beliefs a monetary policy, which aims to stabilize inflation through an active interest …

, the money growth rate should not rise by more than one for one with inflation when the primary surplus is raised with … inflation -- to ensure local equilibrium determinacy. When the central bank links the supply of money to government bonds by … controlling the bond-to-money ratio, an inflation stabilizing policy can be implemented for both fiscal policy regimes. Local …

experiment - where expectations are elicited from human subjects - to collect data on expectations, inflation and output dynamics … under a traditional inflation targeting (IT) framework and a PLT regime with both deflationary and cost-push shocks. We then … implications of PLT, which results in excess macroeconomic volatility. However, once augmented with an inflation guidance from the …