Understanding Policy in the Great Recession: Some Unpleasant Fiscal Arithmetic
John H. Cochrane
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
NBER Working Paper No. w16087
I use the valuation equation of government debt to understand fiscal and monetary policy in and following the great recession of 2008-2009, to think about fiscal pressures on US inflation, and what sequence of events might surround such an inflation. I emphasize that a fiscal inflation can come well before large deficits or monetization are realized, and is likely to come with stagnation rather than a boom.
Number of Pages in PDF File: 43working papers series
Date posted: June 21, 2010
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