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Designing fiscal and monetary institutions in a second-best world

Author

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  • Beetsma, R.M.W.J.
  • Bovenberg, A.L.

    (Tilburg University, Center For Economic Research)

Abstract

This paper explores how fiscal and monetary policy interact if commitment and access to lump-sum taxation are limited. We analyze how equilibrium outcomes for inflation, employment, and public spending are affected by the structural features of an economy, such as money holdings, outstanding public debt, labor-market distortions, society s preferences, and the nature of the policy game. In a normative vein, we compare society s welfare across various institutional settings and investigate how society should optimally adjust the preferences of policymakers.
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Suggested Citation

  • Beetsma, R.M.W.J. & Bovenberg, A.L., 1995. "Designing fiscal and monetary institutions in a second-best world," Discussion Paper 1995-47, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:0fbf1a55-e07a-447c-8995-33bced19602f
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    References listed on IDEAS

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    More about this item

    Keywords

    Central Banks; Monetary Policy; Fiscal Policy; Independence; monetary economics;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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