Commitment vs. discretion in the UK: An empirical investigation of the monetary and fiscal policy regime

Tatiana Kirsanova and Stephanus le Roux

Working Papers from Business School - Economics, University of Glasgow

Abstract: This paper investigates the conduct of monetary and fiscal policy in the post-ERM period in the UK. Using a simple DSGE New Keynesian model of non-cooperative monetary and fiscal policy interactions under fiscal intra-period leadership, we demonstrate that the past policy in the UK is better explained by optimal policy under discretion than under commitment. We estimate policy objectives of both policy makers. We demonstrate that fiscal policy plays an important role in identifying the monetary policy regime.

JEL-codes: E52 E61 E63 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Commitment vs. Discretion in the UK: An Empirical Investigation of the Monetary and Fiscal Policy Regime (2013)
Working Paper: Commitment vs. Discretion in the UK: An Empirical Investigation of the Monetary and Fiscal Policy Regime (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2013_07

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