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A Fiscal Theory of Monetary Policy with Partially-Repaid Long-Term Debt / John H. Cochrane.
- Format:
- Book
- Author/Creator:
- Cochrane, John H.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26745.
- NBER working paper series no. w26745
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2020.
- Summary:
- I construct a simple model with sticky prices and interest rate targets, closed by fiscal theory of the price level with long-term debt and fiscal and monetary policy rules. Fiscal surpluses rise following deficits, to repay accumulated debt, but surpluses do not respond to all values of unexpected inflation and deflation. This specification avoids common puzzles and produces reasonable responses to fiscal and monetary policy shocks. It allows an easy translation of any new-Keynesian model, and it allows one to study a whole sample with active fiscal policy.
- Notes:
- Print version record
- February 2020.
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