We host different speakers at our Economic Theory & Policy Seminar. 

Upcoming topics and speakers will be posted below.

23. March 2026, 16:00 until 17:30

Economic Theory & Policy Seminar / M. Rottner (BIS) / The Perils of Narrowing Fiscal Spaces

Seminar

Matthias Rottner will give a talk at our Economic Theory and Policy Seminar.

Matthias Rottner (BIS)

“The Perils of Narrowing Fiscal Spaces”

When public debt is elevated, the fiscal cost of fighting inflation rises sharply, as interest rate hikes increase government interest expenditures. We formalize this mechanism in a nonlinear New Keynesian model with a state-dependent fiscal constraint on monetary policy. High debt may dampen the monetary response to inflation, generating an inflationary bias even though government debt remains fully fiscally backed. The interaction between high debt and inflationary cost-push shocks makes the fiscal limit more likely to bind, amplifying inflation. In demand-driven downturns, the fiscal constraint may become more restrictive than the zero lower bound, forcing the central bank to either print money to purchase excess debt or accept fiscal dominance.

 

Calendar entry
Event location
TU Wien
1040 Vienna
Wiedner Hauptstr. 8-10, Seminarroom: Sem.R. DA grün 04 (Freihaus Building, green area, 4th floor)
Organiser
ECON
Julia Hutter
julia.hutter@tuwien.ac.at
Public
Yes
Entrance fee
No
Registration required
No
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