Monetary Policy and Public Debt Analysis

This lecture covers the analysis of monetary and fiscal policy responses to public debt accumulation, focusing on the impact of Covid-19 on global economies. It evaluates alternative policies for governments and central banks, using a model with a representative agent, firms, the government, and the central bank. The lecture discusses the budget constraints of the representative agent, production functions of firms, and the New Keynesian Phillips curve. It also explores the role of the government in adjusting labor taxes to maintain sustainable debt-to-GDP dynamics and the use of a Taylor rule by the central bank to decide on monetary policy.