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Policy uncertainty, symbiosis, and the optimal fiscal and monetary conservativeness

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  • Giovanni Di Bartolomeo

    ()

  • Francesco Giuli
  • Marco Manzo

Abstract

This paper extends the stabilization game between monetary and fiscal authorities to the case of multiplicative (model) uncertainty. In this context, the “symbiosis assumption”, i.e. fiscal and monetary policy share the same ideal targets, no longer guarantees the achievement of ideal output and inflation, unless the ideal output is equal to its natural level. A time consistency problem arises.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10663-009-9104-9
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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 36 (2009)
Issue (Month): 4 (November)
Pages: 461-474

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Handle: RePEc:kap:empiri:v:36:y:2009:i:4:p:461-474

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Web page: http://www.springerlink.com/link.asp?id=100261

Related research

Keywords: Monetary-fiscal policy interactions; Nash equilibrium uncertainty; Symbiosis; E61; E63;

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Cited by:
  1. Meixing Dai & Moïse Sidiropoulos, 2011. "Fiscal disciplining effect of central bank opacity: Stackelberg versus Nash equilibrium," Economics Bulletin, AccessEcon, vol. 31(4), pages 3068-3076.
  2. Di Bartolomeo Giovanni & Giuli Francesco, 2009. "Fiscal and monetary interaction under monetary policy uncertainty," wp.comunite 0061, Department of Communication, University of Teramo.

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