Analyzing the Interaction of Monetary and Fiscal Policy: Does Fiscal Policy Play a Valuable Role in Stabilisation?

Vito Muscatelli and Patrizio Tirelli

Working Papers from Business School - Economics, University of Glasgow

Abstract: This paper provides an overview of recent papers which use estimated New Keynesian models to study the extent to which fiscal policy can beused to stabilize the economy. We use a varietyof different New Keynesian models, estimated on data for both theUS and for theEuro area, and highlight the diverse transmission channelst hrough which fiscal policy acts in these models. Although we find that fiscal policy can provide a useful complement to monetary policy, especially in models where consumers have finite horizons, there are import limitations to the value added of fiscal policy

Date: 2004-06, Revised 2005-06
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Citations: View citations in EconPapers (13)

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Journal Article: Analyzing the Interaction of Monetary and Fiscal Policy: Does Fiscal Policy Play a Valuable Role in Stabilisation? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2005_17

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