Fiscal and Monetary Policy Interactions in a Model with Low Interest Rates

• 成果类型: Article
• 署名作者: Miao, Jianjun; Su, Dongling
• 署名单位: Boston University; Shanghai Institute of International Finance & Economics; Shanghai University of Finance & Economics
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20220232
• 发表日期: 2024
• 页码: -
• 关键词: Asset bubbles; public debt; price-level; GROWTH; shocks; time; view

摘要

We provide a new Keynesian model where entrepreneurs face uninsurable idiosyncratic investment risk and credit constraints. Government bonds provide liquidity services. Multiple steady states with positive values of public debt can be supported for a given permanent deficit-to-output ratio. The steady-state interest rates are lower than the economic growth rate, and public debt contains a bubble component. We analyze the determinacy regions of policy parameter space and find that a large set of monetary and fiscal policy parameters can achieve debt and inflation stability given persistent fiscal deficits both away from and at the zero interest rate lower bound.