Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103829
Authors: 
De Graeve, Ferre
Queijo von Heideken, Virginia
Year of Publication: 
2013
Series/Report no.: 
Sveriges Riksbank Working Paper Series 273
Abstract: 
Fiscal theorists warn about the risk of future in.ation as a consequence of current fiscal imbalances in the US. Because actual in.ation remains historically low and data on inflation expectations do not corroborate such risks, warnings for fiscal inflation are often ignored in policy and academic circles. This paper shows that a canonical NK- DSGE model enables identifying an anticipated component of in.ation expectations that is closely related to fiscal policy. Estimation results suggest that fiscal inflation concerns have induced a 1.6%-points increase in long-run inflation since 2001. The model also rationalizes why data on in.ation expectations do not reveal such concerns outright.
Subjects: 
Fiscal policy
inflation
news
JEL: 
E31
E62
Document Type: 
Working Paper

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