The Government's Discount Rate: Choices and Consequences in a Dynamic Framework

P.J. Stemp

No 579, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper considers a closed macroeconomy where the monetary authority pursues an inflation target and policy outcomes are the consequences of a Nash game between fiscal and monetary authorities. The specification of the macroeconomic framework is characterized by nonlinearities which lead to multiple equilibria with differing stability properties. Employing a calibrated model and simulations derived using a Mathematica package, the stability properties of the economy and the likely choice of equilibrium are examined.

Keywords: MONETARY POLICY; GAMES (search for similar items in EconPapers)
JEL-codes: C70 E52 E53 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:579

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