Inflation Targeting under Fiscal Fragility

• 成果类型: Article
• 署名作者: Araujo, Aloisio; Costa, Vitor; Lins, Paulo; Santos, Rafael; De Valk, Serge
• 署名单位: Getulio Vargas Foundation; Instituto Nacional de Matematica Pura e Aplicada (IMPA); Clemson University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20230291
• 发表日期: 2026
• 关键词: debt; monetary; Determinacy

摘要

We propose a model to study an inflation-targeting regime under a high government debt burden. We assume that an altruistic policymaker chooses debt issuance, inflation, and public expenditure, while private agents dislike inflation and finance the government. We show that equilibrium inflation depends on debt level: (i) on-target when debt is low; (ii) above the target when debt is high; (iii) either above or on-target in between, a zone that we named fiscal fragility. Equilibrium inflation also depends on the target level: A higher target may improve welfare by preventing fiscal fragility and reducing debt-rollover costs. (JEL E31, E52, E62, E63, H63, O11, O23)