I use the valuation equation of government debt to understand fiscal and monetary policy in and following the great recession of 2008-2009, to think about whether the US is headed for a fiscal inflation, and what that inflation will look like. I emphasize that a fiscal inflation can come well...

I construct a simple model with sticky prices and interest rate targets, closed by fiscal theory of the price level with long-term debt and fiscal and monetary policy rules. Fiscal surpluses rise followingperiods of deficit, to repay accumulated debt, but surpluses do not respond to arbitrary...

The credit risk exposure of the German banking system is growing again after the 2009 peak and its subsequent reduction. This column comments it through the lens of the Target2 net balances in connection with the capital flows experienced by the Eurozone (EZ) balance of payments. Several aspects...

Weltweit sind die Volkswirtschaften mit hohen Preissteigerungen konfrontiert. Unter anderem beeinflusst die Inflation den Staatshaushalt sowie die Tragfähigkeit der öffentlichen Schulden. Wie und in welchem Ausmaß wird die Staatsschuldenquote durch die höhere Inflationsrate beeinflusst? Es...

We study equilibria in a heterogeneous-agent incomplete-market economy with nominal government debt and flexible prices. Unlike in representative agent economies, steady-state equilibria exist when the government runs persistent deficits, provided that the level of deficits is not too large. In...

The authors review the challenges that the Romanian economy and society had to face in the European and global geoeconomic context. Starting from the perspectives advanced by the international economic fora, the risks the European economy will have to answer through counteracting and general...

The paper argues in favor of significant budget deficits based on the understanding that the expansion of the 1990s was fueled by a great build-up of debt, and that this would eventually give way to a severe recession unless offset by a strong fiscal stimulus. In 2001, with the total government...

Sovereign debt restructurings may experience marginal changes as a result of recent modifications in contractual terms being incorporated into new bond issues, but for the most part they will likely resemble what has generally worked so well in recent decades to the satisfaction of most...

The fiscal theory says that the price level is determined by the ratio of nominal debt to the present value of real primary surpluses. I analyze long-term debt and optimal policy in the fiscal theory. I find that the maturity structure of the debt matters. For example, it determines whether news...