inflation facts. Using a Dynamic Stochastic General Equilibrium model with Markov-switching policy rules, we identify three …

unemployment. This calls in question both the interpretation of potential output estimates as barriers to more vigorous inflation …

positive if the central bank adopts closed-loop strategies that raise the real interest rate when inflation is above target … owing to fiscal deviations. More aggressive defence of the inflation target implies lower debt and higher welfare. Simple …

Competitiveness adjustment in struggling southern euro-area members requires persistently lower inflation than in major … trading partners, but low inflation worsens public debt sustainability. When average euro-area inflation undershoots the two …, inflation and budget surplus assumptions can easily result in a runaway debt trajectory. The case for a greater than five …

We examine the relationship between inflation and fiscal sustainability with a two-step approach. In the first step, we … various measures of inflation such as headline inflation, core inflation, energy inflation, and food inflation affect the … estimate of fiscal sustainability found previously. Our findings indicate that higher inflation rates contribute positively to …

inflation in order to stabilize the expectations of households, firms and innovators. Endogenous growth provides a self … debt-stabilizing inflation when current fiscal deficits are not backed by future fiscal surpluses. Because growth creates … unique stable equilibrium, provided that the policy permits r−g to fall with inflation. …

substantially. The reason for this non-monotonic behavior is the interaction between the dynamics of the inflation rate and the debt …

We develop a theoretical framework to account for the observed instability of the link between inflation and fiscal … bank that has full control over inflation. When policy makers deviate from this Virtuous regime, agents conduct Bayesian … pessimistic about a prompt return to the Virtuous regime and inflation starts drifting in response to a fiscal imbalance. Shocks …