This paper studies the effects generated by limited asset market participation under different fiscal and monetary policy games. We find that the distributional conflict due to limited asset market participation rises the inflation bias when the two authorities are independent and play...

This paper shows that Limited Asset Market Participation generates an extra inflation bias when the fiscal and the monetary authority play strategically. A fully redistributive fiscal policy eliminates the extra inflation-bias, however, the latter is cancelled at the cost of reducing Ricardians'...