target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions … presuppose an ability to commit. Without that ability, the temptation to use inflation surprises to offset monopoly and tax … debt levels and short-term debt exacerbate the inflation bias. But this produces a debt stabilization bias because the …

monetary policy in a later period suffers from an inflation bias from the ax ante point of view …

empirically that countries with more countercyclical inflation, where nominal debt provides better consumption-smoothing, issue … recessions, generating excessively countercyclical inflation in addition to the standard inflationary bias. With countercyclical … inflation, investors require risk premia on nominal debt, making nominal debt issuance costly for low credibility governments …

We propose a continuous time model of nominal debt and investigate the role of inflation credibility in the potential … for self-fulfilling debt crises. Inflation is costly, but reduces the real value of outstanding debt without the full … punishment of default. With high inflation credibility, which can be interpreted as joining a monetary union or issuing foreign …

Brazil has had a long period of high inflation. It peaked around 100 percent per year in 1964, decreased until the … crisis in the early 1980s. We show that the high-inflation period (1960-1994) was characterized by a combination of fiscal … deficits, passive monetary policy, and constraints on debt financing. The transition to the low-inflation period (1995 …

, we document several potential fiscal dominance effects during 2000-2017 under Inflation Targeting (IT), and non …

policies will adjust. Temporarily explosive debt has no effect on inflation if households expect all adjustments to occur … targeting inflation to stabilizing debt, then debt feeds directly into the path of inflation and monetary policy can no longer … control inflation. News that reduces expected primary surpluses can bring future inflation into the present, well before the …

a burst of inflation that devalues the existing nominal debt stock. The probability of this outcome places upward … pressure on inflation expectations and poses a substantial challenge to a central bank pursuing an inflation target. The … distribution of outcomes for the path of future inflation has a fat right tail, revealing that only a small set of outcomes imply …