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Monetary and fiscal institutional designs

  • Dimakou, Ourania
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    Two investment decisions in economic institutions are feasible; investments in monetary institutions in the form of delegation of monetary policy to a more conservative or independent central bank, and investments in fiscal capacity, in the form of combating bureaucratic corruption and its consequent fiscal revenue leakages. Within this framework, we investigate the interactions among those two institutional decisions and the obtained institutional structure. The findings provide support of strategic complementarities; investments in monetary and fiscal institutions reinforce each other. In addition, we identify a set of determinants that impact on the government’s decisions to improve economic institutions, particularly, the structure and intensity of the initial corruption level, the amount of distortions caused by taxation and the policymaker’s goals and preferences across its objectives.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0147596713000140
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    Article provided by Elsevier in its journal Journal of Comparative Economics.

    Volume (Year): 41 (2013)
    Issue (Month): 4 ()
    Pages: 1141-1166

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    Handle: RePEc:eee:jcecon:v:41:y:2013:i:4:p:1141-1166
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622864

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