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Fiscal disciplining effect of central bank opacity: Stackelberg versus Nash equilibrium

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  • Dai, Meixing
  • Sidiropoulos, Moïse

Abstract

In a Stackelberg equilibrium, central bank opacity has a fiscal disciplining effect in the sense that it induces the government to reduce taxes and public expenditures, leading hence to lower inflation and output distortions. This effect could disappear or be dominated by the direct effect of opacity when the fiscal and monetary authorities play a Nash game.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29843.

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Date of creation: 2011
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Handle: RePEc:pra:mprapa:29843

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Keywords: Distortionary taxes; output distortions; central bank transparency (opacity); fiscal disciplining effect.;

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  1. Di Bartolomeo Giovanni & Giuli Francesco, 2009. "Fiscal and monetary interaction under monetary policy uncertainty," wp.comunite, Department of Communication, University of Teramo 0061, Department of Communication, University of Teramo.
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  3. Giovanni Di Bartolomeo & Francesco Giuli & Marco Manzo, 2009. "Policy uncertainty, symbiosis, and the optimal fiscal and monetary conservativeness," Empirica, Springer, Springer, vol. 36(4), pages 461-474, November.
  4. Meixing Dai & Moïse Sidiropoulos, 2010. "Monetary and fiscal policy interactions with central bank transparency and public investment," Working Papers of BETA 2010-21, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  5. Carsten Hefeker & Blandine Zimmer, 2011. "Uncertainty and Fiscal Policy in an Asymmetric Monetary Union," Open Economies Review, Springer, Springer, vol. 22(1), pages 163-178, February.
  6. Demertzis, Maria & Andrew Hughes Hallett, 2003. "Central Bank Transparency in Theory and Practice," Royal Economic Society Annual Conference 2003, Royal Economic Society 56, Royal Economic Society.
  7. Beetsma, Roel M W J & Jensen, Henrik, 2003. " Why Money Talks and Wealth Whispers: Monetary Uncertainty and Mystique: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 35(1), pages 129-36, February.
  8. DEHEZ, Pierre & TELLONE, Daniela, 2008. "Data games. Sharing public goods with exclusion," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2008010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  12. Georgios Chortareas & David Stasavage & Gabriel Sterne, 2002. "Does it pay to be transparent? international evidence form central bank forecasts," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Jul, pages 99-118.
  13. Giuseppe Ciccarone & Enrico Marchetti & Giovanni Di Bartolomeo, 2007. "Unions, Fiscal Policy And Central Bank Transparency," Manchester School, University of Manchester, University of Manchester, vol. 75(5), pages 617-633, 09.
  14. Eijffinger, S.C.W. & Geraats, P.M., 2004. "How Transparent Are Central Banks?," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0411, Faculty of Economics, University of Cambridge.
  15. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(483), pages 532-565, November.
  16. Andrew Hughes Hallett & Nicola Viegi, 2003. "Imperfect transparency and the strategic use of information: an ever present temptation for central bankers?," Manchester School, University of Manchester, University of Manchester, vol. 71(5), pages 498-520, 09.
  17. Pierre Dehez, 2011. "Allocation Of Fixed Costs: Characterization Of The (Dual) Weighted Shapley Value," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 141-157.
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