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Dynamic monetary-fiscal interactions and the role of monetary conservatism

Niemann, S (2011) 'Dynamic monetary-fiscal interactions and the role of monetary conservatism.' Journal of Monetary Economics, 58 (3). 234 - 247. ISSN 0304-3932

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Abstract

Assuming that macroeconomic policies are directed by distinct monetary and fiscal policy makers who cannot commit to future actions, we reassess the implications of monetary conservatism and fiscal impatience in a setting with nominal government debt. For environments where a non-negative steady state level of government debt (assets) emerges in the absence of conservatism and impatience, monetary conservatism induces accumulation of a higher stock of liabilities (assets) and has adverse (positive) welfare implications. This result obtains irrespectively of the degree of fiscal impatience and questions the unambiguous desirability of monetary conservatism traditionally found in the literature. © 2011 Elsevier B.V.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 17 Jul 2012 11:38
Last Modified: 23 Jan 2019 05:15
URI: http://repository.essex.ac.uk/id/eprint/2904

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