Rational Partisan Theory with fiscal policy and an independent central bank

Montserrat Ferré and Carolina Manzano ()

Working Papers from Universitat Rovira i Virgili, Department of Economics

Abstract: The empirical evidence testing the validity of the rational partisan theory (RPT) has been mixed. In this article, we argue that the inclusion of other macroeconomic policies and the presence of an independent central bank can partly contribute to explain this inconclusiveness. This article expands Alesina s (1987) RPT model to include an extra policy and an independent central bank. With these extensions, the implications of RPT are altered signi ficantly. In particular, when the central bank is more concerned about output than public spending (an assumption made by many papers in this literature), then the direct relationship between in flation and output derived in Alesina (1987) never holds. Keywords: central bank, conservativeness, political uncertainty. JEL Classi fication: E58, E63.

Keywords: Bancs centrals; Política monetària; Política fiscal; 338 - Situació econòmica. Política econòmica. Gestió; control i planificació de l'economia. Producció. Serveis. Turisme. Preus (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cba and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Rational Partisan Theory with fiscal policy and an independent central bank (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:urv:wpaper:2072/211881

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