Universität zu Köln

Krause, Michael U. ORCID: 0000-0001-5265-3116 and Moyen, Stephane (2016). Public Debt and Changing Inflation Targets. American economic journal: Macroeconomics, 8 (4). 142 - 177. NASHVILLE: AMER ECONOMIC ASSOC. ISSN 1945-7715

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Abstract

What are the effects of a higher central bank inflation target on the burden of real public debt? Several recent proposals have suggested that even a moderate increase in the inflation target can have a pronounced effect on real public debt. We consider this question in a New Keynesian model with a maturity structure of public debt and an imperfectly observed inflation target. We find that moderate changes in the inflation target only have significant effects on real public debt if they are essentially permanent. Moreover, the additional benefits of not communicating a change in the inflation target are minor.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Krause, Michael U. UNSPECIFIED orcid.org/0000-0001-5265-3116 UNSPECIFIED Moyen, Stephane UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-259174
DOI:	10.1257/mac.20130014
Journal or Publication Title:	American economic journal: Macroeconomics
Volume:	8
Number:	4
Page Range:	142 - 177
Date:	2016
Publisher:	AMER ECONOMIC ASSOC
Place of Publication:	NASHVILLE
ISSN:	1945-7715
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Weitere Institute, Arbeits- und Forschungsgruppen > Center for Macroeconomic Research (CMR)
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language MONETARY; CREDIBILITY; SHOCKS Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/25917