(Re)Evaluating recent macroeconomic policy in the US
University of Glasgow; Polytechnic of Porto; University of Porto
New Keynesian DSGE model with strategic monetary-fiscal policy interactions, distortionary taxation, geometric maturity structure for government debt, Markov-switching policy regimes, and zero lower bound constraint on interest rates
Calvo price setting with backward-looking rule of thumb pricing
Section 8.2, Panel C Fig. 8
Counterfactual: removing lingering Covid-era shocks in 2022Q1; inflation 1pp lower than baseline by 2026