Roberto Billi and I have a new version of our paper "Seemingly Irresponsible but Welfare Improving Fiscal Policy at the Lower Bound: The Role of Expectations." The addition of "The Role of Expectations" to the title emphasizes that a key contribution of the paper is an evaluation of how cognitive discounting affects the performance of an active fiscal policy, passive monetary policy regime in the face of occasional periods at the zero lower bound. The new draft also provides a more integrated introduction and literature review, as well as a streamlined discussion of the basic intuition for the results. It is available at https://people.ucsc.edu/~walshc/MyPapers/fslb_231010.pdf or on Roberto's home page at http://www.rmbilli.com/.
Keywords: automatic stabilizers, cognitive discounting, fiscal and monetary interactions, government debt. JEL: E31, E52, E63.
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