Optimal Fiscal and Monetary Policy: Equivalence Results
Isabel Correia (),
Pedro Teles and
Juan Pablo Nicolini
No 3730, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
In this Paper, we analyse the implications of price setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider an environment with monopolistic competitive firms, a shopping time technology, prices set one period in advance, and government expenditures that must be financed with distortionary taxes. We show that the sets of (frontier) implementable allocations are the same independent of the degree of price stickiness. Furthermore, the sets of policies that decentralize each allocation are also the same except in the extreme cases of flexible and sticky prices, where the sets are larger.
Keywords: Optimal fiscal and monetary policy; Sticky prices (search for similar items in EconPapers)
JEL-codes: E31 E40 E52 E58 E62 E63 (search for similar items in EconPapers)
Date: 2003-02
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)
Downloads: (external link)
https://cepr.org/publications/DP3730 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
Related works:
Journal Article: Optimal Fiscal and Monetary Policy: Equivalence Results (2008) 
Working Paper: Optimal fiscal and monetary policy: equivalence results (2008) 
Working Paper: Optimal Fiscal and Monetary Policy: Equivalence Results (2003) 
Working Paper: Optimal fiscal and monetary policy: equivalence results (2002) 
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:cpr:ceprdp:3730
Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3730
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().