This paper uses a New Keynesian framework to study the coordination of fiscal and monetary policies, in response to an inflation shock when the policymaker acts with commitment. We first show that, in the simplest New Keynesian model, fiscal policy plays no part in the optimal policy response, because of the comparative advantage which monetary policy has in the control of inflation. We the...

The East Asian crisis of 1997-98 and the Mexican crisis of 1994 generated much concern among policy analysts regarding the role of macroeconomic policies in the management of capital inflows. A series of economic reform measures including liberalization of foreign capital inflows were initiated in India since the early nineties. Using the vector autoregression (VAR) method, this paper specifica...

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...

Based on a comprehensive investigation on Chinese Stock Market and macroeconomic policies, analyzing samples of the SSE Composite Index and relevant monetary and fiscal policies during the period from January 2000 to June 2008, this paper uses GARCH-type models and EVIEWS5.1 software to study effects of changes in macroeconomic policy on conditional volatility of Chinese Stock Market and analyz...

This paper reports on the findings of Evans, Guse, and Honkapohja (2007) concerning the global economic dynamics under learning in a New Keynesian model in which the interest rate rule is subject to the zero lower bound. Under normal monetary and fiscal policy, the intended steady state is locally but not globally stable. Large pessimistic shocks to expectations can lead to deflationary spirals...

In this paper, we provide a survey of dynamic game theory with special emphasis on past and possible future applications to problems of international economic policy making, where we concentrate on macroeconomic and stabilization policy problems. First, the paper gives a brief introduction to the theory of dynamic games. Next, we show by example that dynamic game theory can provide insights int...