Strategic Monetary and Fiscal Policy Interactions: An Empirical Investigation

Matteo Fragetta () and Tatiana Kirsanova

No 706, Discussion Papers from University of Exeter, Department of Economics

Abstract: This paper identifies leadership regimes in monetary-fiscal policy interactions in three countries, the UK, the US and Sweden. We specify a small-scale, structural general equilibrium model of an open economy and estimate it using Bayesian methods. We assume that the authorities can act strategically in a non-cooperative policy game, and compare different leadership regimes. We find that the model of fiscal leadership gives the best fit for the UK and Sweden, while in the US the Nash or non-strategic regime dominates.

Keywords: Monetary and Fiscal Policy; Leadership; Macroeconomic Stabilisation; Bayesian Estimation (search for similar items in EconPapers)
JEL-codes: E52 E61 E63 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (6)

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Journal Article: Strategic monetary and fiscal policy interactions: An empirical investigation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:0706

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