Showing 1 - 10 of 90
This paper examines the sources of Australia's business cycle fluctuations focusing on the role of international shocks and short run stabilization policy. A VAR model identified using robust sign restrictions derived from an estimated structural model is used to aid the investigation. The...
Persistent link: https://www.econbiz.de/10011201614
We consider the fiscal multiplier and spillover in an environment in which two countries are caught simultaneously in a liquidity trap. Using a standard New Open Economy Macroeconomics (NOEM) model, an optimizing two-country sticky price model, we show that the fiscal multiplier and spillover...
Persistent link: https://www.econbiz.de/10011201597
In the 1970s-1980s, monetary authorities were usually more active than their fiscal counterparts. After some crises, fiscal policy is currently regaining its role in implementing economic policies. As a sequel to estimating the Indian monetary reaction function, this paper models and estimates a...
Persistent link: https://www.econbiz.de/10010762619
Empirical literature provided convincing evidence that explicit (ie legislated) inflation targets anchor expectations. We propose a novel game theoretic framework with generalized timing that allows us to formally capture this beneficial anchoring effect. Using the framework we identify several...
Persistent link: https://www.econbiz.de/10010904278
This paper generalizes and qualifies an influential monetary policy result due to Rogoff (1985) by taking fiscal policy, and fiscal-monetary interactions, into account. It shows that an appointment of a conservative central banker may, under a range of circum- stances, (i) increase the average...
Persistent link: https://www.econbiz.de/10010904215
We study a business cycle model in which a benevolent fiscal authority must determine the optimal provision of government services, while lacking credibility, lump-sum taxes, and the ability to bond finance deficits. Households and the fiscal authority have risk sensitive preferences. We find...
Persistent link: https://www.econbiz.de/10010699882
This paper investigates the validity of the hypothesis that suggests there is a link between fiscal deficits and inflation in developing countries and further explores this link in the absence of public sector wage expenditure. Sri Lanka, a developing country with a persistent fiscal deficit, a...
Persistent link: https://www.econbiz.de/10010640547
We investigate the roles of a time-varying inflation target and monetary and fiscal policy stances on the dynamics of inflation in a DSGE model. Under an active monetary and passive fiscal policy regime, inflation closely follows the path of the inflation target and a stronger reaction of...
Persistent link: https://www.econbiz.de/10010718046
Monetary and fiscal policies interact in many ways. Recently, the stance of fiscal policy in a number of countries (including the EU and the US) has raised concerns about risks for the outcomes of monetary policy. Our paper first shows that these concerns are justified since - under an ambitious...
Persistent link: https://www.econbiz.de/10010607697
Jointly identifying the effects of both fiscal and monetary policy shocks in an open economy structural VAR poses identification challenges. The innovations in this paper are to combine the methods of identification via sign restrictions, cointegration and traditional exclusion restrictions...
Persistent link: https://www.econbiz.de/10010607729