Showing 1 - 10 of 1,156
institutions. Such an arrangement is inferior to an optimal inflation targeting, or a Rogoff-style central banker, whose optimal …
Persistent link: https://www.econbiz.de/10005789083
Central banks’ economic and political importance has grown in advanced economies since the start of the Great Financial Crisis in 2007. An unwillingness or inability of governments to use countercyclical fiscal policy has made monetary policy the only stabilization tool in town. However, much...
Persistent link: https://www.econbiz.de/10011084413
Rational expectations are often used as a strong argument against policy activism, as they may undermine or neutralize the policymaker’s actions. Although this sometimes happens, rational expectations do not always imply policy invariance or ineffectiveness. In fact, in certain circumstances...
Persistent link: https://www.econbiz.de/10005661866
The optimal policy response to a low-probability extreme event is examined. A simple policy problem is solved for a sequence of different loss functions: quadratic, combined quadratic/absolute-deviation, absolute-deviation, combined quadratic/constant, and perfectionist. The Paper shows that,...
Persistent link: https://www.econbiz.de/10005661622
United States during the 1990s. Proponents of this approach recommend that, when inflation is moderate but still above the … long-run objective, the central bank should not move immediately to fight inflation, but rather wait for exogenous … circumstances — such as favourable supply shocks and unforeseen recessions — to deliver the desired reduction in inflation. While …
Persistent link: https://www.econbiz.de/10005123544
Several recent studies imply that the response of national saving to fiscal policy is non-monotonic. In this paper, we use two data sets to search for the circumstances in which such non-monotonic responses arise: one refers to a sample of OECD countries, as in previous studies, and one to a...
Persistent link: https://www.econbiz.de/10005124252
This paper illustrates some of the most important insights of the literature on international fiscal and monetary policy coordination. It notes that the analysis of international policy interactions is enriched by taking the incentives in the domestic policy process into account. These...
Persistent link: https://www.econbiz.de/10005067609
If discretionary monetary policy implies an inflation bias, monetary unification boosts the accumulation of public debt …
Persistent link: https://www.econbiz.de/10005662146
The interaction between a common monetary policy targeting inflation and decentralized fiscal policies aiming at output …
Persistent link: https://www.econbiz.de/10005666611
inflation bias as monetary policy tries to exploit nominal wage contracts to address labour-market distortions. Although an … inflation target eliminates this inflation bias, it creates a conflict between monetary policy and discretionary fiscal policy …
Persistent link: https://www.econbiz.de/10005667138