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 … distortions, as well as to reduce the real value of government debt, creates a state-dependent inflationary bias problem. High …

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 … distortions, as well as to reduce the real value of government debt, creates a state-dependent inflationary bias problem. High …

, and distortionary taxation on labor and capital income and on consumption expenditures are fit to U.S. data under a … of fiscal instruments to respond to stabilize debt. Second, responses of aggregate variables to fiscal policy shocks … debt. Third, based on estimated policy rules, transfers, capital tax rates, and government spending have historically …