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money may lead to a transitory increase in seigniorage, the retirement of government debt, and lower inflation in both the … low money growth is conditional on inflation remaining below its previous level …
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The celebrated monetarist arithmetic argument of Sargent and Wallace implies outcomes that may be large and unpleasant. But a dynamic stochastic model calibrated to the U.S. economy reveals the quantitative effect of monetarist arithmetic to be small. Monetary policies that react to the level of...
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