Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/230391 
Erscheinungsjahr: 
2020
Schriftenreihe/Nr.: 
Working Paper No. 2020-13
Verlag: 
Federal Reserve Bank of Chicago, Chicago, IL
Zusammenfassung: 
The Covid-19 pandemic found policymakers facing constraints on their ability to react to an exceptionally large negative shock. The current low interest rate environment limits the tools the central bank can use to stabilize the economy, while the large public debt curtails the efficacy of fiscal interventions by inducing expectations of costly fiscal adjustments. Against this background, we study the implications of a coordinated fiscal and monetary strategy aimed at creating a controlled rise of inflation to wear away a targeted fraction of debt. Under this coordinated strategy, the fiscal authority introduces an emergency budget with no provisions on how it will be balanced, while the monetary authority tolerates a temporary increase in inflation to accommodate the emergency budget. In our model, the coordinated strategy enhances the efficacy of the fiscal stimulus planned in response to the Covid-19 pandemic and allows the Federal Reserve to correct a prolonged period of below-target inflation. The strategy results in only moderate levels of inflation by separating long-run fiscal sustainability from a short-run policy intervention.
Schlagwörter: 
Monetary policy
fiscal policy
emergency budget
shock specific rule
COVID
JEL: 
E50
E62
E30
Persistent Identifier der Erstveröffentlichung: 
Dokumentart: 
Working Paper

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