(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 8.1, Panel B Fig. 8
Counterfactual: early lift-off from ZLB in 2021Q3; inflation reduced by 2pp for one year but converges to baseline by 2026