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Understanding Inflation as a Joint Monetary–Fiscal Phenomenon

In: Handbook of Macroeconomics

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  • Leeper, E.M.
  • Leith, C.

Abstract

We develop the theory of price-level determination in a range of models using both ad hoc policy rules and jointly optimal monetary and fiscal policies and discuss empirical issues that arise when trying to identify monetary–fiscal regime. The chapter concludes with directions in which theoretical and empirical developments may go.

Suggested Citation

  • Leeper, E.M. & Leith, C., 2016. "Understanding Inflation as a Joint Monetary–Fiscal Phenomenon," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2305-2415, Elsevier.
    • Handle: RePEc:eee:macchp:v2-2305
    DOI: 10.1016/bs.hesmac.2016.03.012
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    More about this item

    Keywords

    Monetary policy; Fiscal policy; Price level determination; Optimal policy; Tax smoothing; Government debt; E4; E5; E6; H3; H6;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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