Chadha, J.S. and Nolan, C. (2007) Optimal simple rules for the conduct of monetary and fiscal policy. Journal of Macroeconomics, 29 (4). pp. 665-689. ISSN 0164-0704 .
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| Official URL http://dx.doi.org/10.1016/j.jmacro.2005.01.005 |
Abstract
Stabilization policy involves joint monetary and fiscal rules. We develop a model enabling us to characterize systematic simple monetary and fiscal policy over the business cycle. We principally focus on the following question. What are the key properties of the joint simple rule governing the conduct of systematic stabilization policy? We find that conducting stabilization policy incorporates not only a set of monetary policy choices governed by the so-called 'Taylor principle' but also fiscal policy that gives considerable force to automatic stabilizers. Recent US and UK monetary and fiscal choices seem broadly consistent with this model. This result is found to be robust to a number of alternate modeling strategies.
| Item Type: | Article |
|---|---|
| Uncontrolled keywords: | optimal simple rules; monetary and fiscal policy; finite lives |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculties > Social Sciences > School of Economics |
| Depositing User: | Suzanne Duffy |
| Date Deposited: | 21 Apr 2008 09:00 |
| Last Modified: | 14 Jan 2010 14:08 |
| Resource URI: | http://kar.kent.ac.uk/id/eprint/2753 (The current URI for this page, for reference purposes) |
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