We build a dynamic stochastic general equilibrium (DSGE) model with financial repression and conduct estimation and simulation with it using aggregate data. We discuss the interaction and optimal combination of fiscal and monetary policies when the model features SOE monopoly and financial...

We construct a two-part model of the Chinese economy. The first part consists of a money supply equation, a real money demand equation, and a savings equation. The second part comprises a set of sectoral equations. The model estimated is then used to generate a dynamic simulation of the paths of...

We provide an introduction to optimal fiscal and monetary policy using the primal approach to optimal taxation. We use this approach to address how fiscal and monetary policy should be set over the long run and over the business cycle. We find four substantive lessons for policymaking: Capital...

Monetary authorities during a hyperinflation occasionally extract seignorage and then abandon the currency. Modelling the central bank as an exhaustible resource extracting monopolist that equates average and marginal profit to extract remaining seignorage by the optimal stopping time explains...

Fiscal and monetary policy optimization has been the taskforce in many policymaking agendas ofinternational organizations, governments and alliances. However, attempts of the global community did not give the expected effect and rejected the anticipated targets. This article explores the main...

We consider how fear of model misspecification on the part of the planner and/or the households affects welfare gains from optimal macroprudential taxes in an economy with occasionally binding collateral constraints as in Bianchi (2011). On the one hand, there exist welfare gains from...

We provide an introduction to optimal fiscal and monetary policy using the primal approach to optimal taxation. We use this approach to address how fiscal and monetary policy should be set over the long run and over the business cycle. We find four substantive lessons for policymaking: Capital...

This paper analyzes the relationship between inflation, output and government size by reexamining the time inconsistency of optimal monetary and fiscal policies in a general equilibrium model with staggered timing structure for the acquisition of nominal money à la Neiss (Neiss, Katharine S....

This paper develops an overlapping-generations model with heterogeneous agents in terms of earning ability and cash-in-advance constraint. It shows that tax policy cannot fully replicate or neutralize the redistributive implications of monetary policy. While who gets the extra money becomes...

In this paper, we examine the effect of reserve creation due to the Federal Reserve’s Large-scale Asset Purchase programs on bank lending and risk-taking behavior. In particular, we test the existence of a risk-taking channel that induces banks with higher reserve accumulation due to the...