Debt Stabilization Bias and the Taylor Principle : Optimal Policy in a New Keynesian Model with Government Debt and Inflation Persistence »
Series: IMF Working Papers
Author(s): David Vines , and Sven Jari Stehn
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 August 2007
We analyse optimal monetary and fiscal policy in a New-Keynesian model with public debt and inflation persistence. Leith and Wren-Lewis (2007) have shown that optimal discretionary policy is subject to a 'debt stab...