بدهی های عمومی، سیاست های اختیاری و تداوم تورم

We describe a simple mechanism that generates inflation persistence in a standard sticky-price model of optimal fiscal and monetary policy. Key to this mechanism is that policies are implemented under discretion. The government's discretionary incentive to erode the real value of nominal public debt by means of surprise inflation renders inflation expectations and, in further consequence, equilibrium inflation rates highly correlated with the stock of public debt. Debt, in turn, is highly persistent, allowing for tax-smoothing in the face of disturbances. Due to the aforementioned correlation, the persistence in debt carries over to inflation. Our analysis uncovers a non-monotonic effect of nominal rigidities on inflation persistence and shows that government debt under discretion does not display the near random walk property familiar from the Ramsey literature. A calibrated version of the model that incorporates a moderate degree of monopolistic competition and price stickiness is quantitatively consistent with the inflation dynamics experienced in the USA since the Volcker disinflation of the early 1980s.

Ramsey models of optimal fiscal and monetary policy typically predict inflation rates that are negative on average and display almost zero persistence (Chari et al., 1991, Khan et al., 2003, Schmitt-Grohe and Uribe, 2004, Schmitt-Grohe and Uribe, 2010 and Siu, 2004). This empirically implausible prediction has recently been stressed by Chugh (2007), who shows that an otherwise standard model augmented with habits-in-consumption and physical capital accumulation can generate substantial inflation persistence under Ramsey policies. In his model, an increased preference or ability to smooth consumption over time leads to a highly persistent real interest rate; a persistent real interest rate, in turn, implies a persistent inflation rate by the Fisher relationship. The present paper describes an alternative mechanism that generates realistic inflation persistence. We study a fairly standard sticky-price model and argue that optimal inflation rates are highly persistent if policies are implemented under discretion rather than commitment. Key to this result is the government's discretionary incentive to erode the real value of outstanding liabilities by means of surprise inflation. This incentive renders inflation expectations and, in further consequence, equilibrium inflation rates correlated with the level of outstanding debt. Since optimal policies use public debt as a means to smooth tax distortions over time, it displays a high degree of persistence. Due to the aforementioned correlation, this persistence carries over to inflation. Nominal rigidities affect optimal inflation persistence in a non-monotonic way, as two opposing effects are at work. On the one hand, the correlation between debt and inflation becomes weaker as price variations become more costly. On the other hand, the persistence of debt under optimal policies increases in the presence of nominal rigidities: When price adjustments are costly, the policy-maker refrains from using inflation as a shock absorber but uses persistent changes in debt to smooth the effects of shocks over time. Whether an increase in price stickiness raises or lowers inflation persistence therefore depends on which of the two effects is stronger. For a calibrated economy, we show that at very low levels of price stickiness the reduced correlation effect dominates, such that inflation persistence decreases in the amount of price stickiness. At higher levels of price stickiness, the debt persistence effect dominates and inflation persistence accordingly increases. The inflation dynamics generated from our calibrated economy are quantitatively consistent with empirical data for the USA since the Volcker disinflation. Our results also indicate that the dynamic properties of debt under optimal discretionary policy are qualitatively different from those under commitment. Under commitment, debt is used by the government to smooth the distortionary effects of shocks over time and displays a near-random walk property, i.e., temporary innovations to the public budget are financed by permanent changes in taxes and debt (Schmitt-Grohe and Uribe, 2004). Under discretion, variations in the stock of debt in response to adverse shocks are costly, as they induce increased inflation expectations. These, in turn, lead to higher realized inflation rates in equilibrium and therefore higher price adjustment costs and higher nominal interest rate distortions. In light of these costs, the government optimally decides to keep debt in close vicinity of its steady state level. Importantly, this implies that unlike in the Ramsey framework temporary innovations in the public budget are not financed by permanent changes in taxes and debt, i.e., the near-random walk behavior of taxes and debt observed under commitment is overturned under discretion. The remainder of this paper is organized as follows. Section 2 lays out the model economy and characterizes the private-sector equilibrium for given policies. Section 3 presents the optimal policy problem. Section 4 discusses the calibration and numerical solution of the model. Section 5 presents our main findings and confronts the model's predictions regarding inflation dynamics with the empirical evidence in the USA since the Volcker disinflation of the early 1980s. Section 6 discusses the related literature, and Section 7 concludes.

This paper has examined the dynamic properties of inflation in a model of optimal fiscal and monetary policy under discretion. In this model, there is a single benevolent government which can only use distortionary tax instruments, but can issue nominal state-non-contingent debt to shift distortions over time. Under lack of commitment and with nominal public debt, the government's problem is to optimally trade off the benefits and costs of inflation. On the one hand, unanticipated inflation in our model is attractive since it reduces the real value of outstanding liabilities. On the other hand, inflation is costly because it reduces current consumption possibilities by increasing transaction costs. This critical trade-off generates a rationale for fiscal and monetary policies which lead to positive and persistent inflation rates in equilibrium. The key mechanism behind this finding is that the government's desire to smooth consumption implies that public debt is issued in response to macroeconomic shocks. Optimal discretionary policies generate persistent debt; and this persistence carries over to inflation. Calibrating the model to US data after the Volcker disinflation, we obtain empirically plausible inflation dynamics. Our analysis furthermore identifies a non-monotonic effect of nominal rigidities on inflation persistence and shows that government debt under discretion is mean-reverting and thus does not display the near-random walk property familiar from the Ramsey literature. Acknowledgements