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Quantitative Effects of Fiscal Foresight

Leeper, Eric M. - 2010

Changes in fiscal policy typically entail two kinds of lags: the legislative lag--between when legislation is proposed and when it is signed into law--and the implementation lag--from when a new fiscal law is enacted and when it takes effect. These lags imply that substantial time evolves...

Persistent link: https://www.econbiz.de/10012462293

Anchoring Fiscal Expectations

Leeper, Eric M. - 2009

In this lecture, I argue that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary...

Persistent link: https://www.econbiz.de/10012463382

Generalizing the Taylor Principle

Davig, Troy - 2005

The paper generalizes the Taylor principle---the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation---to an environment in which reaction coefficients in the monetary policy rule evolve...

Persistent link: https://www.econbiz.de/10012466797

Liquidity Dependence and the Waxing and Waning of Central Bank Balance Sheets

Acharya, Viral V.; Chauhan, Rahul S.; Rajan, Raghuram Govind - National Bureau of Economic Research - 2023

in 2017, there was no commensurate shrinkage of these claims on liquidity. Consequently, the financial sector was left … more sensitive to potential liquidity shocks, with weaker-capitalized banks most exposed. This necessitated Fed liquidity … provision in September 2019 and again in March 2020. Liquidity-risk-exposed banks suffered the most drawdowns and the largest …

Persistent link: https://www.econbiz.de/10014247971

Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy

Leeper, Eric M. - 2019

The textbook optimal policy response to an increase in government debt is simple--monetary policy should actively target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions presuppose an ability to commit. Without that ability, the...

Persistent link: https://www.econbiz.de/10012479609

Strategic Interactions in U.S. Monetary and Fiscal Policies

Chen, Xiaoshan - 2020

We estimate a model in which fiscal and monetary policy behavior arise from the optimizing behavior of distinct policy authorities, with potentially different welfare functions. Optimal time-consistent policy behavior fits U.S. time series at least as well as rules-based behavior. American...

Persistent link: https://www.econbiz.de/10012481395

Monetary Science, Fiscal Alchemy

Leeper, Eric M. - 2010

Monetary policy decisions tend to be based on systematic analysis of alternative policy choices and their associated macroeconomic impacts: this is science. Fiscal policy choices, in contrast, spring from unsystematic speculation, grounded more in politics than economics: this is alchemy. In...

Persistent link: https://www.econbiz.de/10012462148

"Unfunded Liabilities" and Uncertain Fiscal Financing

Davig, Troy - 2010

We develop a rational expectations framework to study the consequences of alternative means to resolve the "unfunded liabilities'' problem---unsustainable exponential growth in federal Social Security, Medicare, and Medicaid spending with no plan to finance it. Resolution requires specifying a...

Persistent link: https://www.econbiz.de/10012462870

Anchors Away : How Fiscal Policy Can Undermine the Taylor Principle

Leeper, Eric M. - 2009

Slow moving demographics are aging populations around the world and pushing many countries into an extended period of heightened fiscal stress. In some countries, taxes alone cannot or likely will not fully fund projected pension and health care expenditures. If economic agents place sufficient...

Persistent link: https://www.econbiz.de/10012463135

Monetary-Fiscal Policy Interactions and Fiscal Stimulus

Davig, Troy - 2009

Increases in government spending trigger substitution effects--both inter- and intra-temporal--and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy...

Persistent link: https://www.econbiz.de/10012463517