Strategic interaction between fiscal and monetary policies in an export-oriented economy

Coordinating Monetary and Fiscal Policies in an Open Economy

Delegating monetary policy to an independent central bank will not incur coordination problems with fiscal policy. The fiscal authority faces no incentive to try and expand the economy, as its efforts will be quickly countered by a contractionary monetary policy to maintain the inflation target. We argue that this proposition is not true in an open economy. When the external sector is added to ...

Effects of Fiscal and Monetary Policies on the Iranian Economy: An Optimal Control Approach

This paper evaluates the interacted effects of the fiscal and monetary policies on the nominal and real macro-variables of the Iranian economy. Our analysis is thus based on the optimal control theory by which the optimal path of the control variables including monetary and fiscal tools are determined over the period 1963-2006. We also use a macro-econometric model in form of a simultaneous equ...

Monetary and Fiscal Policies In a Heterogeneous-Agent Economy

I study the effects of long-run inflation and income taxation in an economy where households face uninsurable idiosyncratic risks. I construct a tractable competitive search framework that generates dispersion of prices, income and wealth. I analytically characterize the stationary equilibrium and the policy effects on individual choices. Quantitative analysis finds that monetary and fiscal pol...

Optimality Of Monetary And Fiscal Policies In Iran: An Application Of The Stochastic Optimal Control Theory

Strategic Monetary-Fiscal Interactions in a Downturn

Very diverse responses of monetary and fiscal policies have been observed around the world in the post global financial crisis period of 2010-2014. Our paper explores (i) whether the strategic interaction between the central bank and government can explain this diversity, and (ii) what lessons about the institutional design of the two policies can be learnt from it. Particular attention is paid...