One-Sided Uncertainty about Future Fiscal Policy

Betty C. Daniel ()

Journal of Money, Credit and Banking, 1989, vol. 21, issue 2, pages 176-89

Abstract: This paper analyzes the implications of uncertainty regarding future policy rules. The model demonstrates that expansionary fiscal policy, which is expected to be reversed at an unknown future date, can be responsible for sustained exchange rate appreciation, accompanied by persistent rational expectations of depreciations. The predictions of the model are compared with recent U.S. experience. Copyright 1989 by Ohio State University Press.

Date: 1989
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Persistent link: http://EconPapers.repec.org/RePEc:mcb:jmoncb:v:21:y:1989:i:2:p:176-89

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