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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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Bibliographic Info

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. Giuseppe Ciccarone & Enrico Marchetti & Giovanni Di Bartolomeo, 2007. "Unions, Fiscal Policy And Central Bank Transparency," Manchester School, University of Manchester, vol. 75(5), pages 617-633, 09.
  2. DEHEZ, Pierre & TELLONE, Daniela, 2008. "Data games. Sharing public goods with exclusion," CORE Discussion Papers 2008010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Eijffinger, S.C.W. & Geraats, P.M., 2004. "How Transparent Are Central Banks?," Cambridge Working Papers in Economics 0411, Faculty of Economics, University of Cambridge.
  4. Demertzis, Maria & Hughes Hallett, Andrew, 1999. "An Independent Central Bank Faced With Elected Governments," CEPR Discussion Papers 2219, C.E.P.R. Discussion Papers.
  5. 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.
  6. 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, vol. 71(5), pages 498-520, 09.
  7. 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, issue Jul, pages 99-118.
  8. Di Bartolomeo Giovanni & Giuli Francesco, 2009. "Fiscal and monetary interaction under monetary policy uncertainty," wp.comunite 0061, Department of Communication, University of Teramo.
  9. Giovanni Di Bartolomeo & Francesco Giuli & Marco Manzo, 2009. "Policy uncertainty, symbiosis, and the optimal fiscal and monetary conservativeness," Empirica, Springer, vol. 36(4), pages 461-474, November.
  10. Carsten Hefeker & Blandine Zimmer, 2009. "Uncertainty and fiscal policy in an asymmetric monetary union," MAGKS Papers on Economics 200913, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  11. Beetsma, R.M.W.J. & Bovenberg, A.L., 1997. "Designing fiscal and monetary institutions in a second best world," Open Access publications from Tilburg University urn:nbn:nl:ui:12-74437, Tilburg University.
  12. 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, vol. 35(1), pages 129-36, February.
  13. 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., vol. 13(02), pages 141-157.
  14. Demertzis, Maria & Hughes Hallett, Andrew, 2002. "Central Bank Transparency in Theory and Practice," CEPR Discussion Papers 3639, C.E.P.R. Discussion Papers.
  15. Thierry Burger-Helmchen & Laurence Frank, 2011. "La création de rentes : une approche par les compétences et capacités dynamiques," Working Papers of BETA 2011-01, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  16. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
  17. Avinash Dixit & Luisa Lambertini, 2003. "Interactions of Commitment and Discretion in Monetary and Fiscal Policies," Boston College Working Papers in Economics 575, Boston College Department of Economics.
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