Tradeoffs, Delegation and Fiscal-Monetary Coordination in a Developing Economy

This file is part of IDEAS, which uses RePEc data

Tradeoffs, Delegation and Fiscal-Monetary Coordination in a Developing Economy

Author Info

Ashima Goyal (Indira Gandhi Institute of Development Research, Mumbai, India)

Abstract

Strategic interaction between fiscal and monetary authorities and economic agents, can lead to the creation of more populism than is socially optimal. The tradeoffs through which this occurs, important for a populous democracy with a large number of poor, is that between populism and growth. This has not received much analytical attention. We derive this tradeoff from microfoundations (i) and show that a Nash equilibrium will occur with a level of populism higher than the optimal; fiscal and monetary interaction will lead to output below feasible levels, (ii) specify the conditions on which the results depend, (iii) discuss stabilisation possibilities, and (iv) show that optimal delegation to a pro-growth monetary authority and a conservative fiscal authority would lower populism and inflation, while keeping growth at sustainable levels. Last, the model is used to interpret Indian macroeconomic performance.

Download Info
To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Publisher Info
Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 42 (2007)
Issue (Month): 2 (December)
Pages: 141-164
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:dse:indecr:v:42:y:2007:i:2:p:141-164

Contact details of provider:
Postal: Delhi 110 007
Phone: 91-11-2766-6533/34/35, 2766-6703/04/05
Email:
Web page: http://www.econdse.org/
More information through EDIRC

Order Information:
Email:
Web: http://www.ierdse.org/

For technical questions regarding this item, or to correct its listing, contact: (Pami Dua).

Find related papers by JEL classification:
E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

Statistics
Access and download statistics

Did you know? You too can volunteer for RePEc, for example by providing information about publications in your institution.

This page was last updated on 2009-10-29.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.