IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v87y2025icp1436-1451.html
   My bibliography  Save this article

Designing fiscal stabilization rules

Author

Listed:
  • Shahnazarian, Hovick

Abstract

This paper uses a reduced-form New-Keynesian model to derive fiscal stabilization rules across non-cooperative (fiscal or monetary leadership and simultaneous-move games), cooperative, and social planner regimes, with particular attention to effective lower bound (ELB) constraint. Our analysis demonstrates that, in countries where monetary policy is delegated to independent central banks, fiscal leadership serves as a practical second-best solution for stabilization, particularly when other policy interaction regimes are less effective, especially under binding ELB conditions. These findings underscore the crucial role of fiscal policy in overcoming monetary policy constraints and provide actionable insights for policymakers designing stabilization strategies within institutional limitations.

Suggested Citation

  • Shahnazarian, Hovick, 2025. "Designing fiscal stabilization rules," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1436-1451.
    • Handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:1436-1451
    DOI: 10.1016/j.eap.2025.07.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592625002814
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2025.07.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:1436-1451. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.