The US fiscal balance has shown tremendous variation in recent years. Large budget
deficits in the 1980s and early 1990s triggered a substantial literature examining the …

The new edition of a comprehensive treatment of monetary economics, including the first
extensive coverage of the effective lower bound on nominal interest rates. This textbook …

This paper argues that maintaining price stability requires not only commitment to an
appropriate monetary policy rule, but an appropriate fiscal policy rule as well.'Ricardian …

This paper examines the macroeconomic implications of sovereign risk in a model in which
banks hold domestic government debt. News of a future sovereign default hampers financial …

Our chapter reviews positive and normative issues in the interaction between monetary and
fiscal policy, with an emphasis on how views on policy coordination have changed over the …

Where do inflation and deflation ultimately come from? The fiscal theory of the price level
offers a simple answer: Prices adjust so that the real value of government debt equals the …

Macroeconomic theory postulates that persistent fiscal deficits are inflationary. Yet empirical
research has had limited success in uncovering this relationship. This paper reexamines the …

The fiscal theory says that the price level is determined by the ratio of nominal debt to the
present value of real primary surpluses. I analyze long‐term debt and optimal policy in the …

Time series related to fiscal and external deficits are commonly subjected to stationarity and
cointegration tests to assess if the deficits are sustainable. Such tests are incapable of …

The European sovereign debt crisis is an unwelcome reminder that no country can ignore
the requirement of fiscal discipline. It should also clarify many issues on the nature of fiscal …