Corsetti, Giancarlo; Maćkowiak, Bartosz - 2022
uncorrected, must cause inflation, but the imbalance may get corrected in the future with some probability. By maintaining price … stability in the near term, monetary policy can buy time for a correction to take place. The policy gamble may succeed, with …We study a model in which policy aims at aggregate price stability. A fiscal imbalance materializes that, if …