focuses solely on stabilizing nominal wage inflation. Furthermore, this simple wage stabilization rule is remarkably robust to …

inflation to the forefront of policy concerns. Those concerns will only grow as aging populations increase demands on government …, through which fiscal deficits directly affect inflation. The paper describes various ways in which fiscal policy can directly … affect inflation and explains why these fiscal effects are difficult to detect in time series data. …

current and future inflation innovations to revalue government debt, reducing reliance on distorting taxes; (2) the role of … inflation in optimal fiscal financing increases with the average maturity of government debt; (3) as average maturity rises, it … is optimal to tradeoff inflation for output stabilization; (4) inflation is relatively more important as a fiscal shock …

policies will adjust. Temporarily explosive debt has no effect on inflation if households expect all adjustments to occur … targeting inflation to stabilizing debt, then debt feeds directly into the path of inflation and monetary policy can no longer … control inflation. News that reduces expected primary surpluses can bring future inflation into the present, well before the …

appreciable risk of default or higher inflation. But governments in advanced economies issue substantial nominal debt and nominal … devalued through higher current and future inflation rates. The paper develops a simple bond market supply-demand apparatus to … explain how fiscal policy can be a source of inflation, while monetary policy merely determines the timing of inflation. …

taxation, modest inflation, and some reneging on the government's promised transfers. In the equilibrium, inflation …-targeting monetary policy cannot successfully anchor expected inflation. Expectational effects are always present, but need not have … large impacts on inflation and interest rates in the short and medium runs. …

the nominal interest rate is set as a function of output and inflation, and taxes are set as a function of total … inflation coefficient in the interest-rate rule plays a minor role for welfare. It matters only insofar as it affects the …

Standard discussions of flexible inflation targeting as an optimal monetary policy abstract completely from the … consequences of monetary policy for the government budget. But at least some of the countries now adopting inflation targeting have … substantial difficulty in controlling fiscal imbalances, so that the additional strains resulting from strict control of inflation …