Macroeconomic Policy Coordination: the Case of Unstable Inflation and Public Debt Dynamics

Abstract

This work is devoted to the study of stationary States and transitional dynamics of inflation and public debt. Analysis of unilateral or coordinated actions of fiscal and monetary policies is carried out under implicit restrictions that prevent the possibility of a crisis in the financial market. In terms of unstable dynamics of the money and debt market, the principle of "unpleasant monetary arithmetic" by Sargent-Wallace can be supplemented by the principle of "unpleasant fiscal arithmetic".