arithmetic of Sargent and Wallace (1981) states that in a fiscally dominant regime tighter money now can cause higher inflation … normative content. I analyze conditions under which it is optimal in a welfare sense for the central bank to delay inflation by … aforementioned monetarist arithmetic holds, in the sense that if the government finds it optimal to delay inflation, it does so …

money now can cause higher inflation in the future. In spite of the qualifier 'unpleasant,' this result is positive in … central bank to delay inflation by issuing debt to finance part of the fiscal deficit. The analysis is conducted in the … optimal to delay inflation, it does so knowing that it would result in higher inflation in the future. The central result of …

) disinflationary monetary policies entail positive effects on growth; (iii) the optimal long-run inflation rate is zero; (iv) the … Ramsey dynamics implies deviation from full inflation targeting in response to technology and government spending shocks; (v …) the optimal operational rule is backward looking and responds to inflation and output deviations from their long …