Regime Switching Monetary and Fiscal Policy Rules and Interaction there-in: An Indian Case Study

2012 ◽  
Author(s):  
Sanchit Arora
Keyword(s):  
Fiscal Policy ◽  
Regime Switching ◽  
Policy Rules ◽  
Monetary And Fiscal Policy

scholarly journals DESIGNING MONETARY AND FISCAL POLICY RULES IN A NEW KEYNESIAN MODEL WITH RULE-OF-THUMB CONSUMERS

2012 ◽  
Vol 18 (2) ◽  
pp. 395-417 ◽  
Author(s):  
Raffaele Rossi
Keyword(s):  
Steady State ◽  
Fiscal Policy ◽  
Public Debt ◽  
New Keynesian ◽  
Ricardian Equivalence ◽  
New Keynesian Model ◽  
Policy Rules ◽  
Rule Of Thumb ◽  
Keynesian Model ◽  
Monetary And Fiscal Policy

This paper studies the determinacy properties of monetary and fiscal policy rules in a small-scale New Keynesian model. We modify the standard model in two ways. First, we allow positive public debt in the steady state as in Leeper [Journal of Monetary Economics 27, 129–147 (1991)]. Second, we add rule-of-thumb consumers as in Bilbiie [Journal of Economic Theory 140, 162–196 (2008)]. Leeper studied a model in which Ricardian equivalence holds, and he showed that monetary and fiscal policy can be studied independently. In Bilbiie's analysis, rule-of-thumb consumers break the Ricardian equivalence and generate important consequences for the design of monetary policy. In his model, steady-state public debt was equal to zero. We study a model with both rule-of-thumb consumers and positive steady-state public debt. We find that the mix of fiscal and monetary policies that guarantees equilibrium determinacy is sensitive to the exact values of the parameters of the model.

Interactions between Monetary and Fiscal Policy Rules

2000 ◽  
Vol 110 (462) ◽  
pp. C93-C108 ◽  
Author(s):  
Campbell Leith ◽  
Simon Wren‐Lewis
Keyword(s):  
Fiscal Policy ◽  
Policy Rules ◽  
Monetary And Fiscal Policy
Sign in / Sign up

Export Citation Format

Share Document