Chatelain, JeanBernard and Ralf, Kirsten (2020): Ramsey Optimal Policy in the NewKeynesian Model with Public Debt. Forthcoming in: Macroeconomic Dynamics

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Abstract
In the discretetime newKeynesian model with public debt, Ramsey optimal policy eliminates the indeterminacy of simplerules multiple equilibria between the fiscal theory of the price level versus newKeynesian versus an unpleasant equilibrium. If public debt volatility is taken into account into the loss function, the interest rate responds to public debt besides inflation and output gap. Else, the Taylor rule is identical to Ramsey optimal policy when there is zero public debt. The optimal fiscalrule parameter implies the local stability of publicdebt dynamics ("passive" fiscal policy).
Item Type:  MPRA Paper 

Original Title:  Ramsey Optimal Policy in the NewKeynesian Model with Public Debt 
Language:  English 
Keywords:  Fiscal theory of the Price Level, Ramsey Optimal Policy, NewKeynesian model, Fiscal Rule, Taylor Rule, Multiple Equilibria. 
Subjects:  C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61  Optimization Techniques ; Programming Models ; Dynamic Analysis C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62  Existence and Stability Conditions of Equilibrium E  Macroeconomics and Monetary Economics > E4  Money and Interest Rates > E43  Interest Rates: Determination, Term Structure, and Effects E  Macroeconomics and Monetary Economics > E5  Monetary Policy, Central Banking, and the Supply of Money and Credit > E52  Monetary Policy E  Macroeconomics and Monetary Economics > E6  Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61  Policy Objectives ; Policy Designs and Consistency ; Policy Coordination E  Macroeconomics and Monetary Economics > E6  Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62  Fiscal Policy E  Macroeconomics and Monetary Economics > E6  Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63  Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy 
Item ID:  104536 
Depositing User:  JeanBernard Chatelain 
Date Deposited:  05 Dec 2020 13:53 
Last Modified:  05 Dec 2020 13:53 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/104536 