This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model, Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical...

This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model, Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical...

This paper analyzes the impact of a balanced budget rule (BBR) on government financing costs. We construct measures of BBR at the US state government level, and find that states with tighter BBRs are associated with significantly lower state government bond spreads. Furthermore, the credit...