Chatelain, Jean-Bernard; Ralf, Kirsten - In: Economics Bulletin 40 (2020) 1, pp. 140-147
We consider a frictionless constant endowment economy based on Leeper (1991). In this economy, it is shown that, under an ad-hoc monetary rule and an ad-hoc fiscal rule, there are two equilibria. One has active monetary policy and passive fiscal policy, while the other has passive monetary...