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Rational Partisan Theory with fiscal policy and an independent central bank

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  • Ferré Carracedo, Montserrat
  • Manzano, Carolina

Abstract

The empirical evidence testing the validity of the rational partisan theory (RPT) has been mixed. In this article, we argue that the inclusion of other macroeconomic policies and the presence of an independent central bank can partly contribute to explain this inconclusiveness. This article expands Alesina s (1987) RPT model to include an extra policy and an independent central bank. With these extensions, the implications of RPT are altered signi ficantly. In particular, when the central bank is more concerned about output than public spending (an assumption made by many papers in this literature), then the direct relationship between in flation and output derived in Alesina (1987) never holds. Keywords: central bank, conservativeness, political uncertainty. JEL Classi fication: E58, E63.

Suggested Citation

  • Ferré Carracedo, Montserrat & Manzano, Carolina, 2013. "Rational Partisan Theory with fiscal policy and an independent central bank," Working Papers 2072/211881, Universitat Rovira i Virgili, Department of Economics.
  • Handle: RePEc:urv:wpaper:2072/211881
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    Cited by:

    1. Ferré Carracedo, Montserrat & Manzano, Carolina, 2013. "Independent Central Banks: Low inflation at no cost?: A model with fiscal policy," Working Papers 2072/222196, Universitat Rovira i Virgili, Department of Economics.
    2. repec:hpe:journl:y:2017:v:222:i:3:p:65-90 is not listed on IDEAS

    More about this item

    Keywords

    Bancs centrals; Política monetària; Política fiscal; 338 - Situació econòmica. Política econòmica. Gestió; control i planificació de l'economia. Producció. Serveis. Turisme. Preus;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • 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

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