Is Delegating Half of Demand Management Sensible?

Neil Rankin

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: A 1990s view is that inflation is best avoided by delegating monetary policy to an independent central bank. However most analyses overlook fiscal policy, which cannot be delegated. Here we make a very simple extension of the usual policy game by introducing the government as a third player, in charge of a fiscal instrument for demand management. If the government delegates monetary policy, there will be a battle over aggregate demand. Although the bank wins, so that inflation is avoided, it is as the cost of an excessive interest rate. Society's welfare may be lower than with no delegation.

Keywords: Central Bank Independence; Monetary-fiscal coordination; demand Management (search for similar items in EconPapers)
JEL-codes: E52 E63 (search for similar items in EconPapers)
Pages: 17 pages
Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/w ... 95-1998/twerp443.pdf

Related works:
Journal Article: Is Delegating Half of Demand Management Sensible? (1998)
Working Paper: Is Delegating Half of Demand Management Sensible? (1995)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:443

Access Statistics for this paper

More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().