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 …

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 …

near-term economic outlook, characterised by persistently low nominal interest rates and inflation, and in a lasting low …

economies. The general findings for monetary policy are that, while it was costly to lower inflation (in terms of output and … inflation further from its already low level. While inflation was being lowered, in a number of cases central banks were also … evidence that these changes have helped in terms of better anchoring inflation expectations. At the same time there is no firm …

stabilizing inflation, whereas under no debt concerns, monetary policy is very effective in stabilizing the macroeconomy. …

This paper examines the size of the fiscal multiplier values generated in Malaysia. The results show that a government …