"In an economy with nominal rigidities in both an intermediate good sector and a finished good sector, and thus with a natural distinction between CPI and PPI inflation rates, a benevolent central bank faces a tradeoff between stabilizing the two measures of inflation: a final output gap, and...

We address this question by examining the conditional dynamics of inflation and output growth in response to markup shocks for 14 industrialized countries. Markup shocks create a trade-off between output gap and inflation stabilization purposes, and the theory predicts that conditional on such...

Abstract. The stimulus effects of expansionary fiscal policy under average inflationtargeting (AIT) depends on both monetary and fiscal policy regimes. AITfeatures an inflation makeup under the monetary regime, but not under thefiscal regime. In normal times, AIT amplifies the short-run...