. We use a microfounded New Keynesian model of a monetary union which incorporates persistence in inflation, and examine … non-cooperative interactions of fiscal and monetary authorities. We find that particularly when inflation is persistent …

little to the plans.With the assumptions used and actual inflation experienced over the past decade noted, it is important to … look at where inflation may be headed in the longer-term. Several central banks and the IMF project longer-term inflation to … forward, it will be important to see how close government forecasts match actual inflation and, relatedly, how close actual …

experienced relatively high inflation and a market depreciation of their currency. Their monetary systems have gone through …

inflation targeting policy of setting union-wide inflation to zero is never optimal. Second, the interactions lead to a trade … inefficiencies by mitigating the drop in output and inflation and the rise in relative consumption and prices. Such a policy response …