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Five-Equation Macroeconomics: A Simple View of the Interactions Between Fiscal Policy and Monetary Policy.

Abstract:

This paper studies the interactions of fiscal and monetary policy when they stabilise a single economy against shocks in a dynamic setting. We assume that fiscal and monetary policies both stabilise the economy only by causing changes to aggregate demand. Our findings are as follows. If the both policymakers are benevolent, then the best outcome is achieved when the fiscal authority allows monetary policy to perform nearly all of the burden of stabilising the economy. If the monetary authorit...

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Publisher:
CEPR
Volume:
5464
Series:
C.E.P.R. Discussion Papers
Host title:
C.E.P.R. Discussion Papers
Publication date:
2006-01-01
Paper number:
5464
Language:
English
UUID:
uuid:1db1e517-2d70-46f5-b182-b54d6024b800
Local pid:
oai:economics.ouls.ox.ac.uk:11609
Deposit date:
2011-08-16

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