IDEAS home Printed from
   My bibliography  Save this paper

Monetary Policy and Fiscal Policy: Impact Effects with a New Keynesian `Assignment' of Weapons to Targets


  • Meade, James
  • Vines, David


This paper considers fiscal and monetary policy in a short-run static macroeconomic model. There are two objectives, control of inflation and control over the growth of national wealth, and a third outcome of importance, a high level of employment. There are two instruments, monetary policy (the short-term interest rate) and fiscal policy (the rate of income tax). The assignment problem considers whether fiscal policy should be used to control inflation, leaving monetary policy to affect the accumulation of wealth, or whether these roles should be reversed. We consider 'pure' and 'mixed' assignments. The analysis shows that the appropriate assignment will depend fundamentally on the relative strengths of demand-pull and cost-push factors in the determination of wages.

Suggested Citation

  • Meade, James & Vines, David, 1988. "Monetary Policy and Fiscal Policy: Impact Effects with a New Keynesian `Assignment' of Weapons to Targets," CEPR Discussion Papers 246, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:246

    Download full text from publisher

    File URL:
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Polackova, Hana, 1997. "Inflation in nontradables and the macroeconomic policy mix : a model with policy application to transition economies," Policy Research Working Paper Series 1702, The World Bank.


    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:cpr:ceprdp:246. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.