Monetary commitment and fiscal discretion
We study a noncooperative policy game between monetary and fiscal policy, where only monetary policy can commit to future actions. The equilibrium outcome of the game depends on the strategies available to the monetary policymaker. If strategies are left unrestricted, the central bank can alter the...
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| Tipo de recurso: | artículo |
| Fecha de publicación: | 2013 |
| País: | España |
| Institución: | Universitat Autònoma de Barcelona |
| Repositorio: | Dipòsit Digital de Documents de la UAB |
| Idioma: | inglés |
| OAI Identifier: | oai:ddd.uab.cat:203652 |
| Acceso en línea: | https://ddd.uab.cat/record/203652 https://dx.doi.org/urn:doi:10.1257/mac.5.2.187 |
| Access Level: | acceso abierto |
| Palabra clave: | General Aggregative Models Keynes Keynesian Post-Keynesian Macroeconomics Production Price Level Inflation Deflation Monetary Policy Central Banks and Their Policies Fiscal Policy |
| Sumario: | We study a noncooperative policy game between monetary and fiscal policy, where only monetary policy can commit to future actions. The equilibrium outcome of the game depends on the strategies available to the monetary policymaker. If strategies are left unrestricted, the central bank can alter the incentives of the fiscal authority in a way that replicates the full commitment solution. If the central bank cannot commit to respond to fiscal policy, the fiscal authority generates fluctuations in government expenditure that undermine the stabilization goals of the central bank |
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