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Journal Article
Is It Time for Some Unpleasant Monetarist Arithmetic?
Sargent and Wallace (1981) published "Some Unpleasant Monetarist Arithmetic" 40 years ago. Their central message was that a central bank may not have the power to determine the long-run rate of inflation without fiscal support. In a policy regime where the fiscal authority is non-Ricardian, an attempt on the part of the central bank to lower inflation may end up backfiring. I develop a structural model to illustrate this result through the use of a diagram. In addition, I use the model to explain how low inflation, low interest rates, and high primary budget deficits can coexist. I also use ...
Speech
The outlook for the U.S. economy in 2018 and beyond: remarks at the Securities Industry and Financial Markets Association, New York City
Remarks at the Securities Industry and Financial Markets Association, New York City.
Discussion Paper
Is the United States Relying on Foreign Investors to Finance Its Bigger Budget Deficit?
The fiscal packages passed in 2020 and 2021 to help the economy cope with the pandemic caused a dramatic increase in federal government borrowing. One might have expected that foreign investors were important buyers of this new debt, but that was not the case. They were instead net sellers of Treasury securities. Still, the amount of money flowing into the United States increased last year, which helped fund the government’s borrowing, if only indirectly. The upturn in inflows, though, was quite modest as a surge in domestic personal saving largely covered the government’s heightened ...