negative shock. The current low interest rate environment limits the tools the central bank can use to stabilize the economy … controlled rise of inflation to wear away a targeted fraction of debt. Under this coordinated strategy, the fiscal authority … increase in inflation to accommodate the emergency budget. In our model, the coordinated strategy enhances the efficacy of the …

Low and stable inflation requires an appropriate fiscal framework aimed at stabilizing government debt. Historically …, trend inflation is critically influenced by actual or perceived changes to this framework, while cost-push shocks only … account for short-lasting movements in inflation. Before the pandemic, a moderate level of fiscal inflation has counteracted …

Euro Area (EA). We show that following a contractionary shock, the current monetary and fiscal framework weakens economic … from the issue of long-run fiscal sustainability. Following a contractionary shock, the central bank tolerates the increase … in inflation needed to stabilize the amount of Eurobonds issued in response to a large EA recession. National governments …

We argue that long-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. Using … anticipated inflation and unemployment. Second, there is also a positive correlation between anticipated inflation and … unemployment volatility. Third, the long-run inflation-unemployment relationship is not only positive, but also stronger when …

and inflation in these models through a real interest rate channel is shown to be misguided. A decline in output and … inflation is consistent with a decline, increase, or no change in the real interest rate. The expected path of Taylor rule … shocks and the New-Keynesian Phillips Curve are key for inflation and output; the real rate largely reflects consumption …

data has little impact on actual shock estimates, and the estimated effects of monetary policy shocks are similar. …