Fiscal stabilization vs. passivity

Yuting Bai and Eric Leeper

Economics Letters, 2017, vol. 154, issue C, 105-108

Abstract: Fiscal policies that stabilize debt may not provide the fiscal backing necessary for monetary policy to successfully target inflation. Appropriate backing is provided by passive fiscal behavior. Understanding the distinction between stabilizing and passive fiscal policies is central to the design of fiscal rules.

Keywords: Fiscal policy; Fiscal sustainability; Monetary policy (search for similar items in EconPapers)
JEL-codes: E62 E63 H63 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:154:y:2017:i:c:p:105-108

DOI: 10.1016/j.econlet.2017.03.003

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