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responds to inflation and output volatility, especially during economic crises. This framework offers a promising alternative …
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Who prevails when fiscal and monetary authorities disagree about the value of public expenditure and how much to discount the future? When the fiscal authority sets debt as its main policy instrument it achieves fiscal dominance, rendering the preferences of the central bank, and thus its...
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, effective revenue ceilings induce an increase in deficit, debt and inflation. Under many scenarios, including recurrent adverse …
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movements with little inflation response; yet, at some point, something snaps, and a sudden inflation takes off that is strongly …
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We use a simple New Keynesian model, with firm specific capital, non-zero steady-state inflation, long-run risks and … rate by 150 basis points causes output and inflation volatility to rise around 10% above their steady-state standard … deviations from the policy rule and the results are re-enforced by the presence of non-zero trend inflation. …
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