Díaz-Giménez, Javier; Giovanetti, Giorgia; Marimon, Ramon - Barcelona Graduate School of Economics (Barcelona GSE) - 2003
nominal, the incentive to generate unanticipated inflation increases the cost of the outstanding debt even if no unanticipated … inflation episodes occur in equilibrium. Without full commitment, the optimal sequential policy is to deplete the outstanding …We study the effects of nominal debt on the optimal sequential choice of monetary policy. When the stock of debt is …