EconPapers    
Economics at your fingertips  
 

Monetary Commitment and Fiscal Discretion: The Optimal Policy Mix

Stefano Gnocchi

American Economic Journal: Macroeconomics, 2013, vol. 5, issue 2, 187-216

Abstract: We study a noncooperative policy game between monetary and fiscal policy, where only monetary policy can commit to future actions. The equilibrium outcome of the game depends on the strategies available to the monetary policymaker. If strategies are left unrestricted, the central bank can alter the incentives of the fiscal authority in a way that replicates the full commitment solution. If the central bank cannot commit to respond to fiscal policy, the fiscal authority generates fluctuations in government expenditure that undermine the stabilization goals of the central bank. (JEL E12, E23, E31, E52, E58, E62)

JEL-codes: E12 E23 E31 E52 E58 E62 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mac.5.2.187
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/mac.5.2.187 (application/pdf)
http://www.aeaweb.org/aej/mac/ds/0502/2010-0122_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
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:aea:aejmac:v:5:y:2013:i:2:p:187-216

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Macroeconomics is currently edited by Simon Gilchrist

More articles in American Economic Journal: Macroeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

 
Page updated 2025-03-27
Handle: RePEc:aea:aejmac:v:5:y:2013:i:2:p:187-216