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, we analyze optimal monetary policy in three commonly used models of money: a cash-credit economy, a money …-in-the-utility-function economy, and a shopping-time economy. …
Persistent link: https://www.econbiz.de/10005367605
commitment. We then show that optimal policies are time consistent if the Friedman rule is optimal. For our benchmark economy in …
Persistent link: https://www.econbiz.de/10005367747
. We construct an artificial monetary economy incorporating the cash-in-advance framework of Lucas and Stokey (1983 …), calibrate it to match important features of the U.S. economy, and simulate it to provide a quantitative assessment of the …
Persistent link: https://www.econbiz.de/10005372825
is activist in the sense that it responds to shocks to the economy. …
Persistent link: https://www.econbiz.de/10005498465
In this article, we analyze the implications of price-setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider standard monetary economies that differ in the price-setting restrictions imposed on the firms. We show that, independently of the degree or type of...
Persistent link: https://www.econbiz.de/10005498473
Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under …
Persistent link: https://www.econbiz.de/10005427782
Persistent link: https://www.econbiz.de/10000536340
Persistent link: https://www.econbiz.de/10001640184
We study fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the union,...
Persistent link: https://www.econbiz.de/10011277950
The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to follow its policies. If it can commit, then debt constraints can only impose costs. If it cannot commit, then fiscal policy has a free-rider problem, and debt constraints...
Persistent link: https://www.econbiz.de/10005367645