Monetary and Fiscal Policy in Interdependent Economies with Capital Accumulation, Death and Population Growth
AbstractA two-country, optimizing model with capital accumulation, purchasing power parity, floating exchange rates, uncovered interest parity, perfect foresight, finite lives and population growth is developed and analyzed. For the special case of a zero birth rate, individuals are indifferent between tax-finance and bond-finance or money-finance, so that both Ricardian debt-neutrality and monetary super-neutrality prevail. The general case is analyzed by decomposing the model into global averages and differences. A tax-financed increase in monetary growth leads to an interdependent Mundell-Tobin effect in which the world real interest rate falls and capital accumulation increases. A home monetary expansion leads to an increase in home consumption, a fall in foreign consumption and an increase in home holdings of foreign assets. If the expansion occurs through open-market operations, money is super-neutral. The international spillover effects of tax-financed and bond-financed increases in government spending and of bond-financed increases in lump-sum taxation are also considered.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 270.
Date of creation: Sep 1988
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Ploeg, F. van der, 1988. "Monetary and fiscal policy in interdependent economies with capital accumulation, death and population growth," Discussion Paper 1988-7, Tilburg University, Center for Economic Research.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Klundert, T.C.M.J. van de, 1991. "Reducing external debt in a world with imperfect asset and imperfect commodity substitution," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5146601, Tilburg University.
- Ploeg, F. van der, 1989.
"Monetary disinflation, fiscal expansion and the current account in an interdependent world,"
1989-18, Tilburg University, Center for Economic Research.
- Van Der Ploeg, F., 1989. "Monetary Disinflation, Fiscal Expansion And The Current Account In An Interdependent World," Papers 8918, Tilburg - Center for Economic Research.
- van der Ploeg, Frederick, 1990. "Monetary Disinflation, Fiscal Expansion and the Current Account in an Interdependent World," CEPR Discussion Papers 366, C.E.P.R. Discussion Papers.
- Klundert, T.C.M.J. van de, 1990. "Crowding out and the wealth of nations," Discussion Paper 1990-29, Tilburg University, Center for Economic Research.
- Klundert, T.C.M.J. van de, 1989. "Reducing external debt in a world with imperfect asset and imperfect commodity substitution," Discussion Paper 1989-27, Tilburg University, Center for Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.