Monetary Policy Rules and the Effects of Fiscal Policy

We explore the implications of adopting a Taylor-type interest-rate rule in a simple monetary growth model in which budget deficits are financed partly by unbacked government debt. To ensure uniqueness of the steady-state equilibrium, monetary policy cannot be either too "active" or too "passive". The effects of fiscal policy depend crucially on whether monetary policy is active or passive, and are independent of the "tightness" of monetary policy.

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Year of publication:	2010-02
Authors:	Kudoh, Noritaka ; Nguyen, Hong Thang
Institutions:	Graduate School of Economics and Business Administration, Hokkaido University
Subject:	monetary policy rules \| fiscal policy \| overlapping generations

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Extent:	text/html application/pdf
Series:	Discussion paper series. A.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 220 25 pages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008542572