Inflation and Debt Rollover Under Low Interest Rates

• 成果类型: Article; Early Access
• 署名作者: Miao, Jianjun; Shen, Zhouxiang; Su, Dongling
• 署名单位: Zhejiang University; Zhejiang University; Zhejiang University; Shanghai University of Finance & Economics; Shanghai University of Finance & Economics; Shanghai Institute of International Finance & Economics
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12782
• 发表日期: 2025
• 关键词: optimal monetary-policy; public debt; government debt; keynesian model; Asset bubbles; sustainability; deficits

摘要

We provide a New Keynesian model with overlapping generations to study the impact of temporary and permanent increases in fiscal deficits financed by debt rollover policy when interest rates are lower than economic growth rates. The debt rollover policy is feasible in the monetary regime but leads to very slow-moving debt. This policy generates persistent inflation for a temporary increase in fiscal deficits, but persistent disinflation for a permanent increase. For social welfare, the debt rollover policy dominates the conventional fiscal rule to finance a temporary increase in fiscal deficits, but it is dominated if the increase is permanent.