We develop a new class of general-equilibrium models with partially unfunded debt to propose a fiscal theory of persistent inflation. In response to business cycle shocks, the monetary authority controls inflation and the fiscal authority stabilizes debt. However, the central bank accommodates unfunded fiscal shocks, causing persistent movements in inflation, output, and real interest rates. In an estimated quantitative model, fiscal inflation accounts for the bulk of inflation dynamics. In the aftermath of the pandemic, unfunded fiscal shocks sustain the recovery, but also cause a persistent increase in inflation. The model is able to predict the inflationary effects of the American Rescue Plan Act (ARPA) fiscal stimulus out of sample and with real time data.

中文翻译：

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持续通货膨胀的财政理论

我们开发了一类新的具有部分未融资债务的一般均衡模型，以提出持续通货膨胀的财政理论。为应对商业周期冲击，货币当局控制通货膨胀，财政当局稳定债务。然而，中央银行应对资金不足的财政冲击，导致通胀、产出和实际利率持续变动。在估计的定量模型中，财政通胀占通胀动态的大部分。在大流行之后，资金不足的财政冲击维持了复苏，但也导致通胀持续上升。该模型能够通过样本和实时数据预测美国救援计划法案 (ARPA) 财政刺激的通胀效应。