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Debt Stabilization Bias and the Taylor Principle : Optimal Policy in a New Keynesian Model with Government Debt and Inflation Persistence

Vines, David - 2007

We analyse optimal monetary and fiscal policy in a New-Keynesian model with public debt and inflation persistence … requires debt to be returned to its pre-shock level. This finding has two important implications for optimal discretionary … the interest rate in response to a cost-push shock - and therefore violates the Taylor principle. We show that this …

Persistent link: https://www.econbiz.de/10014399841

A possible approach to fiscal rules in small islands : incorporating natural disasters and climate change

Nakatani, Ryota - 2019

A big challenge for the economic development of small island countries is dealing with external shocks. The Pacific Islands are vulnerable to natural disasters, climate change, commodity price changes, and uncertain donor grants. The question that arises is how should small developing countries...

Persistent link: https://www.econbiz.de/10012103680

Fiscal dominance in Sub-Saharan Africa revisited

Hooley, John; Nguyen, Lam; Saito, Mika; Towfighian, … - 2021

). Fiscal dominance has always been a pressing problem as it can contribute to inflation and macroeconomic instability, and … and inflation …

Persistent link: https://www.econbiz.de/10012517915

Demand-Side Stabilization Policies : What is the Evidence of their Potential?

Kandil, Magda E. - 2000

, in a decline in aggregate demand growth and inflation, with limited effects on output growth. On the other hand, higher … variability of monetary shocks results, on average, in an increase in inflation and a decline in output growth. These results …

Persistent link: https://www.econbiz.de/10014403797

A New Rule : The Swiss Debt Brake

Danninger, Stephan - 2002

The paper provides an international comparison and a comprehensive analysis of a new fiscal expenditure rule for the federal government in Switzerland. The proposed rule has two innovative features: it aims at a structurally balanced budget in the short-run by annually setting a cyclically...

Persistent link: https://www.econbiz.de/10014400054

Trust what you hear : policy communication, expectations, and fiscal credibility

End, Nicolas; Hong, Gee Hee - 2022

How do policy communications on future f iscal targets af fect market expectations and beliefs about the future conduct of f iscal policy? In this paper, we develop indicators of f iscal credibility that quantify the degree to which policy announcements anchor expectations, based on the...

Persistent link: https://www.econbiz.de/10013170265

A requiem for the fiscal theory of the price level

Farmer, Roger E. A.; Zabczyk, Pawel - 2019

The Fiscal Theory of the Price Level (FTPL) is the claim that, in a popular class of theoretical models, the price level is sometimes determined by fiscal policy rather than monetary policy. The models where this claim has been established assume that all decisions are made by an...

Persistent link: https://www.econbiz.de/10012112131

Models of Inflation and the Costs of Disinflation

Meredith, Guy - 1991

This paper focuses on the output costs of disinflation. A model of inflation with both forward and backward elements … seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output … is considered. An alternative, more credible policy may be to announce an exchange rate peg to a low inflation currency …

Persistent link: https://www.econbiz.de/10014395898

Constrained efficient borrowing with sovereign default risk

Hatchondo, Juan Carlos; Martinez, Leonardo; Roch, Francisco - 2020

Using a quantitative sovereign default model, we characterize constrained efficient borrowing by a Ramsey government that commits to income-history-contingent borrowing paths taking as given ex-post optimal future default decisions. The Ramsey government improves upon the Markov government...

Persistent link: https://www.econbiz.de/10012392477

Do fiscal rules cause better fiscal balances? : a new instrumental variable strategy

Caselli, Francesca; Reynaud, Julien - 2019

This paper estimates the causal effect of fiscal rules on fiscal balances in a panel of 142 countries over the period 1985-2015. Our instrumental variable strategy exploits the geographical diffusion of fiscal rules across countries. The intuition is that reforms in neighboring countries may...

Persistent link: https://www.econbiz.de/10012009457