Policy Uncertainty, Symbiosis, and the Optimal Fiscal and Monetary Conservativeness

Giovanni Di Bartolomeo (), Francesco Giuli and Marco manzo
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Francesco Giuli: Department of Public Economics, University of Rome 'La Sapienza'
Marco manzo: Department of Public Economics, University of Rome 'La Sapienza'

Macroeconomics from EconWPA

Abstract: This paper extends the stabilization game between monetary and fiscal authorities to the case of multiplicative (model) uncertainty. In this context, the “symbiosis assumption”, i.e. fiscal and monetary policy share the same ideal targets, no longer guarantees the achievement of ideal output and inflation, unless the ideal output is equal to its natural level. A time consistency problem arises.

Keywords: Monetary-fiscal policy interactions; uncertainty; symbiosis. (search for similar items in EconPapers)
JEL-codes: E61 E63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2005-08-05
Note: Type of Document - pdf; pages: 21
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http://129.3.20.41/eps/mac/papers/0508/0508005.pdf (application/pdf)

Related works:
Working Paper: Policy Uncertainty, Symbiosis, and the Optimal Fiscal and Monetary Conservativeness (2008)
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