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Zero Inflation Targets: Central Bank Commitment and Fiscal Policy Outcomes

Author

Listed:
  • Peter J. Stemp

    (University of Melbourne)

  • William M. Scarth

    (McMaster University, Canada)

Abstract

This paper considers a central bank with a zero inflation target and a fiscal authority with a differing objective. Situations under which the fiscal authority is able to exploit the central bank's commitment to zero inflation are examined. An example using a calibrated model shows that, in practice, it may be irrelevant whether or not the fiscal authority is aware of the central bank's objective.

Suggested Citation

  • Peter J. Stemp & William M. Scarth, "undated". "Zero Inflation Targets: Central Bank Commitment and Fiscal Policy Outcomes," Computing in Economics and Finance 1996 _055, Society for Computational Economics.
    • Handle: RePEc:sce:scecf6:_055
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    References listed on IDEAS

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