The Sensitivity of Fiscal Policy Effects to Assumptions about the Behavior of the Federal Reserve’ by Ray C. Fair
نویسنده
چکیده
The purpose of this paper is to examine within the context of a patieular U.S. exammetric model the sensitivity of fiscal policy effects to alternative assumptions about the behavior of the Federal Reserve. Five cases are considered, four in which Fed behavior is exogenous and one in which Fed behavior is endogenous. In each of the four exogenous cases the Fed is assumed to control a particular variable, which is then taken to be exogenous for purposes of the fiscal-policy experiments. For the endogetmus case an estimated equation explaining Fed behavior is added to the model. and the expanded mcdel is used to perform the experiments. The rewlts of some optimal control experiments are also reported in this paper. These latter experiments are designed to examine the sensitivity of optimal fiscal policies to alternative assumptions about Fed behavior. The main conclusion of this paper is that fiscal policy effects and optimal fiscal policies are quite sensitive to assumptions about the behavior of the Fed.
منابع مشابه
Actual Federal Reserve Policy Behavior and Interest Rate Rules
conomists attempting to approximate the policy behavior of the Federal Reserve often have done so by estimating interest rate rules for the United States. In these rules, the variable on the left-hand side is the interest rate that the Federal Reserve is assumed to control, while the variables on the right-hand side are those that are assumed to affect Federal Reserve behavior. There have been ...
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تاریخ انتشار 1997