Fiscal, Monetary, and Financial Interactions in Dynamic General Equilibrium
نویسنده
چکیده
This paper proposes a model that links households and firms, as usual, by markets for factors and goods and, additionally, by a banking sector that channels households’ funds to firms and eliminates idiosyncratic risk. In equilibrium, agency costs and tax benefits of corporate debt are equalizing each other, which renders an institutionally based explanation of financial structure. Adjustment of corporate finance adds to the ordinary savings channel of fiscal and monetary policy. Taking real and financial interactions into account, the model predicts a somewhat lower impact of fiscal policy on macroeconomic aggregates as commonly assessed and a much stronger impact of monetary policy. This amplification is caused by the banking sector’s translation of borrowing rates into lending rates and vice versa.
منابع مشابه
Monetary and Fiscal Policy Interaction in Iran: A Dynamic Stochastic General Equilibrium Approach
Achieving the goals of price stability, sustainable economic growth, and the improvement of many economic variables require coordination between the monetary and financial authorities. In this study, a new modified Keynesian stochastic dynamic equilibrium general equilibrium model is introduced for Iran and in the framework of game theory, optimal policy of fiscal and monetary authorities are d...
متن کاملEvaluation of Monetary and Fiscal Policy Based on New Keynesian Dynamic General Equilibrium Model in Iran’s Economy
This paper examines monetary and fiscal policy through the estimation of a New-Keynesian dynamic general equilibrium model for Iran’s economy. In this New-Keynesian dynamic general equilibrium model, the consumers encounter the liquidity constraint and the firms face sticky prices, while they are changing them. In the model presented, a role is considered for both government spending and taxati...
متن کاملwww.econstor.eu Fiscal, Monetary, and Financial Interactions in Dynamic General Equilibrium
متن کامل
The Impact of Publishing Islamic Treasury Bills on Fiscal Sustainability of the Iranian Government by Using a Dynamic Stochastic General Equilibrium Model
From the perspective of government accounting, the Publishing of Islamic Treasury Bills, due to the nature of these bonds that transfer of debt is permissible, there will be no additional financial burden for the government in the form of principal and interests of them. In other securities, on the other hand, the government is bound to pay the principal and its interests on the date of maturit...
متن کاملThe Effects of Monetary Policy on Output and Inflation in Afghanistan: A Dynamic Stochastic General Equilibrium Approach
T he consequences of the decisions and policies taken for the reconstruction of Afghanistan during the past decade, showed that there should be paid more attention to the monetary policies. There is also a question that whether monetary policies have the potential to affect the production and inflation in Afghanistan or not. The aim of this paper is to explore this effect by designin...
متن کامل