Chadha, Jagjit S. (2011) Policy Choices Under Monetary and Fiscal Theories of the Price Level. Macroeconomics and Finance in Emerging Market Economies, 4 (2). pp. 189-212. ISSN 1752-0843. (doi:10.1080/17520843.2011.557389) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:11178)
The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. | |
Official URL: http://dx.doi.org/10.1080/17520843.2011.557389 |
Abstract
Price-level determination requires co-ordination of monetary and Öscal policy
to ensure a unique rational expectations equilibrium (REE). This paper derives
a number of implications for simple interest rate rules resulting from various
Öscal strategies. We show that Öscal choices under either the monetary theory
of the price-level (MTPL) and the Öscal theory of the price-level (FTPL) can
challenge widely accepted principles of monetary policy. SpeciÖcally, we show
that a Öscal rule that responds aggressively to output and ináation may force the
monetary authorities to adopt signiÖcantly more aggressive output and ináation
stabilization policy than suggested by the Taylor Principle. We also show how
when monetary policy is severely constrained, the Öscal policy maker can act to
stabilise the economy. Some policy conclusions in light of the lower zero bound for
monetary policy and debt stabilization are drawn.
Item Type: | Article |
---|---|
DOI/Identification number: | 10.1080/17520843.2011.557389 |
Uncontrolled keywords: | Monetary and Fiscal Policy Rules; Ricardian, non-Ricardian fiscal policy |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Divisions > Division of Human and Social Sciences > School of Economics |
Depositing User: | Jagjit Chadha |
Date Deposited: | 29 Jun 2011 16:56 UTC |
Last Modified: | 16 Nov 2021 09:49 UTC |
Resource URI: | https://kar.kent.ac.uk/id/eprint/11178 (The current URI for this page, for reference purposes) |
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