rates in an economy in which taxation is either lump-sum or distortionary. Under lump-sum taxation, we confirm the well … taxation, this classification is no longer relevant. Nominal determinacy is always ensured since distortionary taxes establish … primary surplus is exogenous or endogenous. Distortionary taxation, however, increases the scope for real indeterminacy. As a …

Does an inflation conservative central bank agrave; la Rogoff (1985) remain desirable in a setting with endogenous … spending. The optimal inflation rate internalizing this distortion is positive, but lack of monetary commitment robustly … generates too much inflation. A conservative monetary authority thus remains desirable. Exclusive focus on inflation by the …