Inflation and Exchange Rate Targeting Challenges Under Fiscal Dominance
نویسندگان
چکیده
Countries have significantly increased their public-sector borrowing since the Global Financial Crisis. As a consequence, monetary authorities may face pressure to deviate from policy targets in ways designed ease debt burden. In view of this consideration, we test for greater fiscal dominance over 2000-2017 under Inflation Targeting (IT) and non-IT regimes. We find that evidence varies across countries configurations. Higher ratios public debt-to-GDP appear associated with lower interest rates advanced economies. However, declining natural rate largely explains pattern higher these countries. The most robust lies among emerging markets regimes, composed mostly exchange targeters. For countries, are non-linearly levels, depending on both level hard-currency currency composition debt. also show market economies volatility, inflation underlying commodity exposure exhibit stronger associations between rates.
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ژورنال
عنوان ژورنال: Journal of Macroeconomics
سال: 2021
ISSN: ['1873-152X', '0164-0704']
DOI: https://doi.org/10.1016/j.jmacro.2020.103281