Simple Monetary Rules under Fiscal Dominance
研究在财政主导的国家中，遵循泰勒原则的利率规则是否可行。发现即使加入对政府债务的反应，也会导致通胀剧烈波动并频繁触及零下限，最优反应为负，消除财政主导的福利收益远大于调整规则。
This paper asks whether interest rate rules that respond aggressively to inflation, following the Taylor principle, are feasible in countries that suffer from fiscal dominance. We find that if interest rates are allowed to also respond to government debt, they can produce unique equilibria. But such equilibria are associated with extremely volatile inflation. The resulting frequent violations of the zero lower bound make such rules infeasible. Even within the set of feasible rules the welfare optimizing response to inflation is highly negative. The welfare gain from responding to government debt is minimal compared to the gain from eliminating fiscal dominance.