Learning the monetary/fiscal interaction under trend inflation
研究在新凯恩斯模型中，提高通胀目标如何影响不同货币/财政政策组合下理性均衡的确定性和可学习性，并分析央行透明度的作用。
How does a higher inflation target affect determinacy and learnability of rational expectations equilibria under alternative monetary/fiscal policy mixes in new Keynesian models? What is the role of central bank transparency? This article proves that in a non-Ricardian regime, determinacy and learnability conditions are insensitive to changes in trend inflation and to transparency issues: expectations stabilization requires taxes to react weakly to government debt. Conversely, a higher inflation target always destabilizes expectations under active monetary regimes. In a Ricardian regime, raising the inflation target requires a more hawkish central bank to attain determinacy. However, determinacy implies learnability only when agents are aware of both the inflation target and the central bank reaction function. If agents need to learn a positive inflation target, active monetary regimes are unstable. Therefore, fully disclosing the reaction function, including the target inflation rate, greatly increases the central bank’s effectiveness in stabilizing expectations.