Optimal Fiscal And Monetary Policy Under Sticky Prices
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Optimal Fiscal And Monetary Policy Under Sticky Prices
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Author : Stephanie Schmitt-Grohé
language : en
Publisher:
Release Date : 2001
Optimal Fiscal And Monetary Policy Under Sticky Prices written by Stephanie Schmitt-Grohé and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Fiscal policy categories.
This paper studies optimal .scal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous stream of purchases by levying distortionary income taxes, printing money, and issuing one-period nominally risk-free bonds. The main findings of the paper are: First, for a miniscule degree of price stickiness (i.e., many times below available empirical estimates)the optimal volatility of in.ation is near zero. This result stands in stark contrast with the high volatility of inflation implied by the Ramsey allocation when prices are flexible. The finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy. Second, even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates, as in economies with real non-state-contingent debt only. Finally, sluggish price adjustment raises the average nominal interest rate above the one called for by the Friedman rule.
Optimal Fiscal And Monetary Policy With Sticky Wages And Sticky Prices
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Author : Sanjay K. Chugh
language : en
Publisher:
Release Date : 2005
Optimal Fiscal And Monetary Policy With Sticky Wages And Sticky Prices written by Sanjay K. Chugh and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Fiscal policy categories.
Optimal Fiscal And Monetary Policy With Sticky Prices
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Author : Henry E. Siu
language : en
Publisher:
Release Date : 2002
Optimal Fiscal And Monetary Policy With Sticky Prices written by Henry E. Siu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with categories.
Optimal Fiscal And Monetary Policy Under Imperfect Competition
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Author : Stephanie Schmitt-Grohe
language : en
Publisher:
Release Date : 2001
Optimal Fiscal And Monetary Policy Under Imperfect Competition written by Stephanie Schmitt-Grohe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Competition, Imperfect categories.
Optimal Fiscal And Monetary Policy In Customer Markets
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Author : David M. Arseneau
language : en
Publisher:
Release Date : 2008
Optimal Fiscal And Monetary Policy In Customer Markets written by David M. Arseneau and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Inflation (Finance) categories.
A growing body of evidence suggests that ongoing relationships between consumers and firms may be important for understanding price dynamics. We investigate whether the existence of such customer relationships has important consequences for the conduct of both long-run and short-run policy. Our central result is that when consumers and firms are engaged in long-term relationships, the optimal rate of price inflation volatility is very low even though all prices are completely flexible. This finding is in contrast to those obtained in first-generation Ramsey models of optimal fiscal and monetary policy, which are based on Walrasian markets. Echoing the basic intuition of models based on sticky prices, unanticipated inflation in our environment causes a type of relative price distortion across markets. Such distortions stem from fundamental trading frictions that give rise to long-lived customer relationships and makes pursuing inflation stability optimal.
Optimal Simple And Implementable Monetary And Fiscal Rules
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Author : Stephanie Schmitt-Grohe
language : en
Publisher:
Release Date : 2004
Optimal Simple And Implementable Monetary And Fiscal Rules written by Stephanie Schmitt-Grohe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Monetary policy categories.
The goal of this paper is to compute optimal monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government consumption. We consider simple policy rules whereby the nominal interest rate is set as a function of output and inflation, and taxes are set as a function of total government liabilities. We require policy to be implementable in the sense that it guarantees uniqueness of equilibrium. We do away with a number of empirically unrealistic assumptions typically maintained in the related literature that are used to justify the computation of welfare using linear methods. Instead, we implement a second-order accurate solution to the model. Our main findings are: First, the size of the inflation coefficient in the interest-rate rule plays a minor role for welfare. It matters only insofar as it affects the determinacy of equilibrium. Second, optimal monetary policy features a muted response to output. More importantly, interest rate rules that feature a positive response of the nominal interest rate to output can lead to significant welfare losses. Third, the optimal fiscal policy is passive. However, the welfare losses associated with the adoption of an active fiscal stance are negligible.
Optimal Fiscal And Monetary Policy Debt Crisis And Management
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Author : Mr.Cristiano Cantore
language : en
Publisher: International Monetary Fund
Release Date : 2017-03-30
Optimal Fiscal And Monetary Policy Debt Crisis And Management written by Mr.Cristiano Cantore and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-30 with Business & Economics categories.
The initial government debt-to-GDP ratio and the government’s commitment play a pivotal role in determining the welfare-optimal speed of fiscal consolidation in the management of a debt crisis. Under commitment, for low or moderate initial government debt-to-GPD ratios, the optimal consolidation is very slow. A faster pace is optimal when the economy starts from a high level of public debt implying high sovereign risk premia, unless these are suppressed via a bailout by official creditors. Under discretion, the cost of not being able to commit is reflected into a quick consolidation of government debt. Simple monetary-fiscal rules with passive fiscal policy, designed for an environment with “normal shocks”, perform reasonably well in mimicking the Ramsey-optimal response to one-off government debt shocks. When the government can issue also long-term bonds–under commitment–the optimal debt consolidation pace is slower than in the case of short-term bonds only, and entails an increase in the ratio between long and short-term bonds.
Optimal Fiscal And Monetary Policy In A Medium Scale Macroeconomic Model
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Author : Stephanie Schmitt-Grohé
language : en
Publisher:
Release Date : 2006
Optimal Fiscal And Monetary Policy In A Medium Scale Macroeconomic Model written by Stephanie Schmitt-Grohé and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Fiscal policy categories.
Under an income-tax regime, the optimal income tax rate is quite stable, with a mean of 30 percent and a standard deviation of 1.1 percent. Simple monetary and fiscal rules are shown to implement a competitive equilibrium that mimics well the one induced by the Ramsey policy. When the fiscal authority is allowed to tax capital and labor income at different rates, optimal fiscal policy is characterized by a large and volatile subsidy on capital.
Optimal Fiscal And Monetary Policy When Money Is Essential
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Author : S. Boragan Aruoba
language : en
Publisher:
Release Date : 2006
Optimal Fiscal And Monetary Policy When Money Is Essential written by S. Boragan Aruoba and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Economic policy categories.
Optimal Fiscal And Monetary Policy Under Stick Prices
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Author : Stephanie Schmitt-Grohé
language : es
Publisher:
Release Date : 2002
Optimal Fiscal And Monetary Policy Under Stick Prices written by Stephanie Schmitt-Grohé and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with categories.