Fiscal and monetary policies in complex evolving economies

Giovanni Dosi, Giorgio Fagiolo (), Mauro Napoletano, Andrea Roventini and Tania Treibich

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Abstract: What is the most appropriate combination of fiscal and monetary policies in economies subject to banking crises and deep recessions? We study this issue using an agent-based model that is able to reproduce a wide array of macro- and micro-empirical regularities. Simulation results suggest that policy mixes associating unconstrained, counter-cyclical fiscal policy and monetary policy targeting employment is required to stabilise the economy. We also show that "discipline-guided" fiscal rules can be self-defeating, as they depress the economy without improving public finances. Finally, we find that the effects of monetary and fiscal policies become sharper as the level of income inequality increases.

Keywords: Agent-based model; Fiscal policy; Monetary policy; Income inequality; Austerity policies (search for similar items in EconPapers)
Date: 2015
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01241658v1
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Citations: View citations in EconPapers (253)

Published in Journal of Economic Dynamics and Control, 2015, 52, pp.166-189. ⟨10.1016/j.jedc.2014.11.014⟩

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Related works:
Journal Article: Fiscal and monetary policies in complex evolving economies (2015)
Working Paper: Fiscal and monetary policies in complex evolving economies (2015)
Working Paper: Fiscal and monetary policies in complex evolving economies (2014)
Working Paper: Fiscal and Monetary Policies in Complex Evolving Economies (2014)
Working Paper: Fiscal and monetary policies in complex evolving economies (2014)
Working Paper: Fiscal and monetary policies in complex evolving economies (2014)
Working Paper: Fiscal and Monetary Policies in Complex Evolving Economies (2014)
Working Paper: Fiscal and monetary policies in complex evolving economies (2014)
Working Paper: Fiscal and Monetary Policies in Complex Evolving Economies (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01241658

DOI: 10.1016/j.jedc.2014.11.014

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