Fiscal and Monetary Regimes: A Strategic Approach

Jean Barth Lemy and Guillaume Plantin
Authors registered in the RePEc Author Service: Jean Barthélemy

Working papers from Banque de France

Abstract: This paper develops a full-fledged strategic analysis of Wallace's game of chicken . A public sector facing legacy nominal liabilities is comprised of fiscal and monetary authorities that respectively set the primary surplus and the price level in a non-cooperative fashion. We find that the post 2008 feature of indefinitely postponed fiscal consolidation and rapid expansion of the Federal Reserve's balance sheet is consistent with a strategic setting in which neither authority can commit to a policy beyond its current mandate, and the fiscal authority moves before the monetary one at each date.

Keywords: : Fiscal Policy; Monetary Policy; Policy Interactions; Game of Chicken. (search for similar items in EconPapers)
JEL-codes: C72 E42 E50 E63 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2019
New Economics Papers: this item is included in nep-gth, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://publications.banque-france.fr/sites/defaul ... /documents/wp742.pdf

Related works:
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regime: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regime: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regime: A Strategic Approach (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:742

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