(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, p.12-13
Baseline forecast 2026 with estimated policy regimes and stochastic shocks; inflation expected 1.5% above 2% target
Main forecast result discussed in Section 8 as baseline outcome for 2026