BIS paper models fiscal influence on monetary policy
Researchers propose alternative mechanism to fiscal theory of the price level
New research proposes a way by which economists can model the increasing pressure on monetary policy-makers from ballooning government debt.
The working paper, published on February 2 by the Bank for International Settlements, outlines a non-linear new Keynesian model with a fiscal constraint that occasionally binds, creating a ceiling for the policy rate.
Authors Hanno Kase, Leonardo Melosi, Sebastian Rast and Matthias Rottner note that high debt burdens worldwide have coincided with “renewed
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@centralbanking.com test test test
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@centralbanking.com test test test
More on Economics
EU cannot fully disconnect from US, say Nagel and Kocher
German and Austrian governors say bloc can take steps to gain more sovereignty
BIS study finds no long-term decline of global dollar use
Reports of euro’s demise are also greatly exaggerated, researchers say
BoE’s Greene: impact of Fed easing on UK remains unclear
Spillovers via trade channel could push domestic inflation up or down, MPC member says
Trade liberalisation with China increased US wages – study
Fed researchers find ‘long-suspected’ benefits for labour market
Beige Books show promise at predicting recessions – study
LLM data on Fed reports is more accurate at forecasting downturns than yield spread, authors find
Trade fragmentation still favours west over east – BdF study
Authors says US-led bloc better placed to win over neutral states than China-aligned grouping
Private credit to grow in Europe in 2026 – S&P
Basel implementation and diversification away from US point to more activity, analysts say
Eurozone food inflation to ease in 2026 – ECB bulletin
Sticky prices have moderated in recent months and should decline further in 2026, economists say