Fiscal-Monetary-Interactions

Atif Mian · Ludwig Straub · Amir Sufi

This paper develops a tractable continuous-time model to study the fiscal sustainability of government deficits and the joint dynamics of public debt, with two main ingredients: an endogenous interest …

George-Marios Angeletos · Chen Lian · Christian K. Wolf

The paper asks whether a government can run a deficit today — issuing “stimulus checks” — and allow debt to return to its initial level without any future tax hike or spending cut. In …

Kevin X.D. Huang · Qinglai Meng · Jianpo Xue

Layer 1: Overview This paper overturns the longstanding consensus established by Schmitt-Grohé and Uribe (1997) that relying on capital income tax adjustments to balance the government budget …

Christoph Grosse-Steffen · Laura Pagenhardt · Malte Rieth

A central debate in fiscal policy is whether fiscal rules—numerical constraints on budget deficits or debt levels—impair a government’s ability to respond to adverse economic shocks, creating a …

Zhengyang Jiang · Hanno Lustig · Stijn Van Nieuwerburgh · Mindy Z. Xiaolan

Layer 1: Overview This paper studies three centuries of U.K. fiscal history to understand the fiscal implications of safe asset supplier status — what the authors call “exorbitant …

Fabio Ghironi · Daisoon Kim · Galip Kemal Ozhan

Sanctions are increasingly used as an instrument of economic statecraft, yet their macroeconomic consequences—especially the transitional dynamics and their effects on business cycles—are poorly …

Sebastian Schmidt

The paper builds a discrete-time DSGE model with Calvo sticky prices in which the public sector has two feedback rules that can hit corners, generating endogenous shifts between an …

Francois Le Grand · Xavier Ragot

The Chamley-Judd result (1986) states that the optimal long-run capital income tax rate is zero in representative-agent models. This paper shows that introducing heterogeneous agents — specifically, …

Jens H. E. Christensen · Simon T. Hetland

The paper introduces the concept of “passive quantitative easing” (passive QE): a deliberate reduction in government debt issuance that lowers anticipated future bond supply and reduces …

Marco Bacchetta · Philippe Bacchetta · Elena Perazzi

Layer 1: Overview This paper asks whether sovereign debt crises can be self-fulfilling — triggered by lenders’ expectations of default rather than by weak fiscal fundamentals alone — and whether …

Mamoon Kader · Hashmat Khan · Minjoon Lee · Raúl Razo-García

Layer 1: Overview This paper uses an open-economy heterogeneous-household model with incomplete markets to evaluate the welfare and distributional consequences of the U.S. Tax Cuts and Jobs Act (TCJA) …

Zhengyang Jiang · Hanno Lustig · Stijn Van Nieuwerburgh · Mindy Z. Xiaolan

Layer 1: Overview This paper asks whether the U.S. government exploits its market power as the dominant global supplier of safe assets when setting the quantity of public debt, and quantifies the …