When the government issues long-term bonds, the optimal time-consistent fiscal and monetary policy is to consolidate debt in a liquidity trap by increasing taxes and by taming public spending. This prescription is at odds with large deficit-spending undertaken in the US during previous liquidity...

When the government issues long-term bonds, the optimal time-consistent fiscal and monetary policy is to consolidate debt in a liquidity trap by increasing taxes and by taming public spending. This prescription is at odds with large deficit-spending undertaken in the US during previous liquidity...

The recent literature has emphasized that government intervention when consumers have quasi-hyperbolic preferences ('bias for the present') over consumption is not welfare-enhancing. This paper introduces a market imperfection (which takes the form of a negative externality) and shows that...

The recent literature has emphasized that government intervention when consumers have quasi-hyperbolic preferences ('bias for the present') over consumption is not welfare-enhancing. This paper introduces a market imperfection (which takes the form of a negative externality) and shows that...