Tight Money and the Sustainability of Public Debt ∗

  • Sergey Pekarski
  • Published 2017


In the celebrated paper “Some Unpleasant Monetarist Arithmetic,” Sargent and Wallace (1981) show that tight monetary policy is not feasible unless it is supported by appropriate fiscal adjustment. In this paper, we explore a simple forwardlooking monetary model to show that an anticipated decrease in the growth rate of base money is not necessarily… (More)

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