This 1977 Journal of Political Economy paper by Finn Kydland and Edward Prescott argues that optimal control theory -- the standard technique proposed for macroeconomic stabilization policy -- is not …
This 1983 Journal of Monetary Economics paper by Robert Barro and David Gordon shows that a monetary authority acting with full discretion each period will generate more inflation on average than one …
A dynamic stochastic general equilibrium model in which a government that must roll over one-period debt can be forced into default purely because lenders expect it -- and a characterisation of …