We study discretionary non-cooperative monetary and fiscal policy stabilization in the New Keynesian model, where the fiscal authority uses distortionary taxes as policy instrument. We explicitly model different frequencies of fiscal and monetary policy operations. We find that standard models of monetary and fiscal policy interactions may substantially overestimate the social gain from the sta...

Greater transparency and disclosure of bank activities will not prevent future banking crises unless appropriate monetary, fiscal, and regulatory policies are also adopted. Nonetheless, greater disclosure of banking problems can reduce the costs of banking crises, even if transparency is not a panacea for preventing banking crises. key words: Disclosure, Transparency, Banking Crisis This paper ...

Using an estimated DSGE model that features monetary and fiscal policy interactions and allows for equilibrium indeterminacy, we find that a passive monetary and passive fiscal policy regime prevailed in the pre-Volcker period while an active monetary and passive fiscal policy regime prevailed post-Volcker. Since both monetary and fiscal policies were passive pre-Volcker, there was equilibrium ...

Abstract Using an estimated DSGE model that features monetary and fiscal policy interactions and allows for equilibrium indeterminacy, we find that a passive monetary and passive fiscal policy regime prevailed in the pre-Volcker period while an active monetary and passive fiscal policy regime prevailed post-Volcker. Since both monetary and fiscal policies were passive pre-Volcker, there was equ...

Pacific Economic Bulletin Volume 21 Number 2 2006 © Asia Pacific Press Granger causality tests confirm the results from the bounds-testing approach of the long-run relationships between Fiji’s economic growth and fiscal and monetary policies and exports. Government expenditure, representing fiscal policy, is assessed to have a greater impact than monetary policy and exports on Fiji’s gross dome...

The fiscal position of many countries is worrying – and getting worse. Should formally independent central bankers be concerned about observed fiscal excesses spilling over to monetary policy and jeopardizing price stability? To provide some insights, this paper tracks the interactions between fiscal and monetary policies in the data across time and space. It makes three main contributions. The...

Although there is a substantial body of literature on macroeconomic policies in Latin America, the role of fiscal and monetary policies as tools to stabilize the business cycle has not received much attention. This is understandable in light of the fact that during the last thirty years, both fiscal and monetary policies were responsible, to a large degree, for the region’s history of macroecon...

Early critics of the euro’s design pointed to the disruptive potential — both political and economic — of country-specific shocks in a monetary union that is a far cry from an optimal currency area. The euro crisis has confirmed the risks associated with a ‘one-size-fits-all’ monetary policy, decentralized financial supervision, and inadequate fiscal backstops. This article examines how the act...