The U.S. fiscal cliff has sparked renewed interest on the issue of fiscal sustainability. Using a time-varying parameter model with a longer data set (1916-2011), there is evidence that the response of primary surplus-income ratio to debt-GDP ratio shows (1) substantial variation over time, (2)...

The fiscal position of many countries is worrying - and getting worse. Should formally independent central bankers be concerned that observed fiscal excesses spill over to monetary policy, and jeopardize price stability? To provide some insights this paper tracks the interactions between fiscal...