Independent Central Banks: Low inflation at no cost?: A model with fiscal policy

Montserrat Ferré Carracedo and Carolina Manzano ()

Working Papers from Universitat Rovira i Virgili, Department of Economics

Abstract: In this article we extend the rational partisan model of Alesina and Gatti (1995) to include a second policy, fiscal policy, besides monetary policy. It is shown that, with this extension, the politically induced variance of output is not always eliminated nor reduced by delegating monetary policy to an independent and conservative central bank. Further, in flation and output stabilisation will be affected by the degree of conservativeness of the central bank and by the probability of the less in flation averse party gaining power. Keywords: rational partisan theory; fiscal policy; independent central bank JEL Classi fication: E58, E63.

Keywords: Bancs centrals; Política fiscal; Política monetària; 336 - Finances. Banca. Moneda. Borsa (search for similar items in EconPapers)
Date: 2013
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http://hdl.handle.net/2072/222196

Related works:
Journal Article: Independent Central Banks: Low Inflation at No Cost? A Model with Fiscal Policy (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:urv:wpaper:2072/222196

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