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dc.contributor.authorAcocella, Nicola
dc.contributor.authorDi Bartolomeo, Giovanni
dc.contributor.authorTirelli, Patrizio
dc.date.accessioned2017-05-10T03:54:10Z
dc.date.available2017-05-10T03:54:10Z
dc.date.issued2015
dc.identifier.issn1365-1005
dc.identifier.doi10.1017/S1365100513000837
dc.identifier.urihttp://hdl.handle.net/10072/336481
dc.description.abstractThis paper offers a reinterpretation of the Fed's time-varying implicit inflation target, based on two considerations. The first is that the need to alleviate the burden of distortionary taxation may justify the choice of a positive inflation rate. The second is based on compelling evidence that the degree of price and wage indexation falls with trend inflation. In fact, we find that a proper characterization of the joint evolution of fiscal variables and nominal rigidities has a strong impact on the Ramsey optimal policies, implying optimal inflation dynamics that are consistent with the observed evolution of U.S. trend inflation. By contrast, tax policies have been too lax, especially at the time of the controversial Bush tax cuts.
dc.description.peerreviewedYes
dc.languageEnglish
dc.language.isoeng
dc.publisherCambridge University Press
dc.relation.ispartofpagefrom1294
dc.relation.ispartofpageto1308
dc.relation.ispartofissue6
dc.relation.ispartofjournalMacroeconomic Dynamics
dc.relation.ispartofvolume19
dc.subject.fieldofresearchEconomic Theory not elsewhere classified
dc.subject.fieldofresearchEconomic Theory
dc.subject.fieldofresearchApplied Economics
dc.subject.fieldofresearchEconometrics
dc.subject.fieldofresearchcode140199
dc.subject.fieldofresearchcode1401
dc.subject.fieldofresearchcode1402
dc.subject.fieldofresearchcode1403
dc.titleU.S. trend inflation reinterpreted: The role of fiscal policies and time-varying nominal rigidities
dc.typeJournal article
dc.type.descriptionC1 - Articles
dc.type.codeC - Journal Articles
gro.hasfulltextNo Full Text
gro.griffith.authorTirelli, Patrizio


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