Designing fiscal and monetary institutions in a second-best world

R.M.W.J. Beetsma, A.L. Bovenberg

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Abstract

This paper explores how fiscal and monetary policy interact if commitment and access to lump-sum taxation are limited. We analyze how equilibrium outcomes for inflation, employment, and public spending are affected by the structural features of an economy, such as money holdings, outstanding public debt, labor-market distortions, society s preferences, and the nature of the policy game. In a normative vein, we compare society s welfare across various institutional settings and investigate how society should optimally adjust the preferences of policymakers.
Original languageEnglish
PublisherUnknown Publisher
Number of pages41
Volume1995-47
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper
Volume1995-47

Keywords

  • Central Banks
  • Monetary Policy
  • Fiscal Policy
  • Independence
  • monetary economics

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