Full publication: "http://ssrn.com/abstract=2078895" Threat of Fiscal Dominance?We identify the economic environments in which it is most important for monetary policy to be able to track the natural rate of interest. To do this, we study two models: one is a standard New Keynesian model; in the...

Casual observation indicates that in recent years real interest rates in the United States appear to have risen sharply and have remained high relative to historical standards. Many observers have claimed that these high real rates have been transmitted abroad and have lead to high real rates in...