Wren-Lewis, Simon; Kirsanova, Tatiana - Department of Economics, Oxford University - 2007
We examine the impact of different degrees of fiscal feedback on debt in an economy with nominal rigidities where … monetary policy is optimal. We look at the extent to which different degrees of fiscal feedback enhances or detracts from the … find the optimal level of fiscal feedback to be small. There is a clear discontinuity in the behaviour of monetary policy …