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 …

This paper investigates the impact of fiscal shocks on inflation, using a large panel of 139 countries over the period … 1970–2021. First, both headline and core measures of inflation increase in response to expansionary shifts in the fiscal … with care in aggregate demand management as it has significant effects on inflation, which are highly dependent on fiscal …

multiplier of fiscal expansion is found to be significantly dampened by tighter financial conditions in case households are less …

multiplier effects of shocks to net-revenues, taxes, social security contributions and benefits in a proxy SVAR framework …). We find multiplier effects of net-revenue components for Germany between 0 and 1 for both the top-down and bottom …

larger multiplier when it issues short term debt. We find that the latter effect dominates and that the optimal policy for …