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Managing a Liquidity Trap : Monetary and Fiscal Policy
Werning, Iván - 2011
I study monetary and fiscal policy in liquidity trap scenarios, where the zero bound on the nominal interest rate is … the paper. I find that the optimal interest rate is set to zero past the liquidity trap and jumps discretely up upon exit …. Inflation may be positive throughout, so the absence of deflation is not evidence against a liquidity trap. Output, on the other …
Persistent link: https://www.econbiz.de/10013120966
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Inflation's Role in Optimal Monetary-Fiscal Policy
Leeper, Eric M. - 2013
We study how the maturity structure of nominal government debt affects optimal monetary and fiscal policy decisions and equilibrium outcomes in the presence of distortionary taxes and sticky prices. Key findings are: (1) there is always a role for current and future inflation innovations to...
Persistent link: https://www.econbiz.de/10013072342
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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 optimal monetary and fiscal policies and discuss empirical issues that arise when trying to identify monetary-fiscal regime. The article concludes with directions in which...
Persistent link: https://www.econbiz.de/10013001761
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The Imbalances of the Bretton Woods System 1965 to 1973 : U.S. Inflation, the Elephant in the Room
Bordo, Michael D. - 2018
This paper argues that the key deep underlying fundamental for the growing international imbalances leading to the collapse of the Bretton Woods system between 1971 and 1973 was rising U.S. inflation since 1965. It was driven in turn by expansionary fiscal and monetary policies—the elephant in...
Persistent link: https://www.econbiz.de/10012906267
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The Monetary and Fiscal History of Bolivia, 1960–2017
Kehoe, Timothy J. - 2019
After the economic reforms that followed the National Revolution of the 1950s, Bolivia seemed positioned for sustained growth. Indeed, it achieved unprecedented growth from 1960 to 1977. The rapid accumulation of debt due to persistent deficits and a fixed exchange rate policy during the 1970s...
Persistent link: https://www.econbiz.de/10012892582
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The Monetary and Fiscal History of Brazil, 1960-2016
Ayres, João - 2019
Brazil has had a long period of high inflation. It peaked around 100 percent per year in 1964, decreased until the first oil shock (1973), but accelerated again afterward, reaching levels above 100 percent on average between 1980 and 1994. This last period coincided with severe balance of...
Persistent link: https://www.econbiz.de/10012895494
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Coordination and Crisis in Monetary Unions
Aguiar, Mark - 2014
We characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the...
Persistent link: https://www.econbiz.de/10013050319
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Monetary/Fiscal Policy Mix and Agents' Beliefs
Bianchi, Francesco - 2014
We reinterpret post World War II US economic history using an estimated microfounded model that allows for changes in the monetary/fiscal policy mix. We find that the fiscal authority was the leading authority in the ‘60s and the ‘70s. The appointment of Volcker marked a change in the...
Persistent link: https://www.econbiz.de/10013052676
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Fiscal Policies, Inflation and Capital Formation
Feldstein, Martin S. - 2004
Three ways of averting "excess saving" have been emphasized in both theory and practice. The thrust of the Keynesian prescription was to increase the government deficit to provide demand for the resources that would not otherwise be used for either consumption or investment. In this way,...
Persistent link: https://www.econbiz.de/10014135796
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Labor Markets and Monetary Policy : A New-Keynesian Model with Unemployment
Blanchard, Olivier J. - 2010
We construct a utility-based model of fluctuations, with nominal rigidities and unemployment, and draw its implications for the unemployment-inflation tradeoff and for the conduct of monetary policy.lt;brgt;lt;brgt;We proceed in two steps. We first leave nominal rigidities aside. We show that,...
Persistent link: https://www.econbiz.de/10012759440