Targets and Instruments

In writing this paper Alan Blinder accepted a difficult charge: the issue of coordination of monetary and fiscal policy is much discussed at a shallow level but it is hard to know how to write a scholarly paper on the subject. Although I have numerous criticisms to offer, the paper is without question a stimulating one that breaks new ground in the analysis of policy coordination issues. Blinder has chosen a theoretical approach rather than a historical and institutional one. His paper is not about actual policy, but about a framework within which actual policy in the United States or any other country might be analyzed. Given this theoretical outlook, it would have been better if he had not attached labels such as "Administration" and "Federal Reserve" to the players in his models. He should have referred simply to "policy authority A" and "policy authority B." He should have avoided making off-hand comments about the preferences and attitudes of the Administration and Federal Reserve, since he offers no supporting discussion for these comments and the paper is not really about actual policy and actual policymakers.