Replication data for: Fiscal Foundations of Inflation: Imperfect Knowledge
Principal Investigator(s): View help for Principal Investigator(s) Stefano Eusepi; Bruce Preston
Version: View help for Version V1
Name | File Type | Size | Last Modified |
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Code | 10/12/2019 01:30:AM | ||
Data | 10/12/2019 01:30:AM | ||
Save | 10/12/2019 01:30:AM | ||
LICENSE.txt | text/plain | 14.6 KB | 10/11/2019 09:30:PM |
Readme.txt | text/plain | 6.2 KB | 10/11/2019 09:30:PM |
Project Citation:
Eusepi, Stefano, and Preston, Bruce. Replication data for: Fiscal Foundations of Inflation: Imperfect Knowledge. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E112960V1
Project Description
Summary:
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This paper proposes a theory of the fiscal foundations of inflation based on imperfect knowledge and learning. Because imperfect knowledge breaks Ricardian equivalence, the scale and composition of the public debt matter for inflation. High and moderate duration debt generates wealth effects on consumption demand that impairs the intertemporal substitution channel of monetary policy: aggressive monetary policy is required to anchor inflation expectations. Counterfactual experiments conducted in an estimated model reveal that the US economy would have been substantially more volatile over the Great Inflation and Great Moderation periods if US debt levels had been those observed in Italy or Japan.
Scope of Project
JEL Classification:
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D84 Expectations; Speculations
E31 Price Level; Inflation; Deflation
E32 Business Fluctuations; Cycles
E52 Monetary Policy
E62 Fiscal Policy
H63 National Debt; Debt Management; Sovereign Debt
D84 Expectations; Speculations
E31 Price Level; Inflation; Deflation
E32 Business Fluctuations; Cycles
E52 Monetary Policy
E62 Fiscal Policy
H63 National Debt; Debt Management; Sovereign Debt
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