Economics, Econometrics and Finance
4 years ago

Using nominal debt can stabilize economy and boost consumption, study finds.

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SSRN Electronic Journal
Optimal Fiscal and Monetary Policy with Nominal and Indexed Debt
Thomas F. Cosimano, Michael Gapen

Paper Summary

Debt composition matters for government policy. Using nominal debt can help stabilize the economy and increase output and consumption. The benefits of using nominal debt are as significant as the benefits of being able to borrow money.

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