Publications [#339231] of Francesco Bianchi

Journal Articles

1. Bianchi, F; Melosi, L, The dire effects of the lack of monetary and fiscal coordination, Journal of Monetary Economics, vol. 104 (June, 2019), pp. 1-22, Elsevier BV [doi]
   (last updated on 2022/07/06)

   Abstract:
   If the government's willingness to stabilize debt is waning, while the central bank is adamant about keeping inflation low, the economy enters a vicious spiral of higher inflation, monetary tightening, recession, and further debt accumulation. The mere possibility of this conflict represents a drag on the economy. A commitment to inflate away the debt accumulated during a large recession leads to welfare improvements and lower uncertainty by separating long-run fiscal sustainability from the short-run fiscal stimulus. This strategy can be used to avoid the zero lower bound. As a technical contribution, we explain how to build shock-specific policy rules.