A Fiscal Theory of Persistent Inflation*

• 成果类型: Article
• 署名作者: Bianchi, Francesco; Faccini, Renato; Melosi, Leonardo
• 署名单位: Johns Hopkins University; National Bureau of Economic Research; Centre for Economic Policy Research - UK; Federal Reserve System - USA; Federal Reserve Bank - Chicago
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjad027
• 发表日期: 2023
• 页码: 2127-2179
• 关键词: price-level determinacy; monetary-policy; Government Bonds; regime switches; models; shocks

摘要

We develop a new class of general-equilibrium models with partially unfunded debt to propose a fiscal theory of persistent inflation. In response to business cycle shocks, the monetary authority controls inflation and the fiscal authority stabilizes debt. However, the central bank accommodates unfunded fiscal shocks, causing persistent movements in inflation, output, and real interest rates. In an estimated quantitative model, fiscal inflation accounts for the bulk of inflation dynamics. In the aftermath of the pandemic, unfunded fiscal shocks sustain the recovery but also cause a persistent increase in inflation. The model is able to predict the inflationary effects of the American Rescue Plan Act fiscal stimulus out of sample and with real-time data.