Coordinating macroeconomic policy in a simple AK growth model
نویسنده
چکیده
Modern theories of government finance stress the importance of an economy s fiscal deficits in determining the course of monetary policy. Modern growth theory stresses the role of monetary factors in economic growth. This paper explores how these two are interrelated, using a simple AK growth model, one with money, reserve requirements, and government debt. We provide a comprehensive look at the coordination of macroeconomic policy and its effects on long-run growth under three alternative coordinating arrangements. We uncover some unconventional results regarding the relationship between growth and a number of policy variables; these rest squarely on the constraint of the coordination process. 2005 Elsevier Inc. All rights reserved. JEL classification: E5; E6
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