BUDGET BALANCE AND EQUILIBRIUM INCOME: A COMMENT ON THE EFFICACY OF FISCAL AND MONETARY POLICY IN AN OPEN ECONOMY

1966 ◽  
Vol 21 (3) ◽  
pp. 489-498 ◽  
Author(s):  
Wallace E. Oates
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Budget Balance ◽  
Fiscal And Monetary Policy

scholarly journals Fiscal and monetary policy in new Keynesian DSGE models

2014 ◽  
Author(s):  
Πέτρος Βαρθαλίτης
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Open Economy ◽  
Small Open Economy ◽  
New Keynesian ◽  
Dsge Models ◽  
Dsge Model ◽  
Keynesian Model ◽  
Monetary And Fiscal Policy ◽  
Fiscal And Monetary Policy

This thesis is about monetary and fiscal policy in New Keynesian DSGE models. Chapter 2 presents the baseline New Keynesian DSGE model. Monetary policy is in the form of a simple interest rate Taylor-type policy rule, while fiscal policy is exogenous. Chapter 3 extends the model of Chapter 2 to include fiscal policy. Now, both monetary and fiscal policy are allowed to follow feedback rules. Chapter 4 sets up a New Keynesian model of a semi-small open economy with sovereign risk premia. Finally, Chapter 5 builds a New Keynesian DSGE model consisting of two heterogeneous countries participating in a monetary union.Throughout most of the thesis, policy is conducted via "simple", "implementable" and "optimized" feedback policy rules. Using such rules, the aim of policy is twofold: firslty, it aims to stabilize the economy when the latter is hit by shocks; secondly, it aims to improve the economy's resource allocation.

scholarly journals Szoki polityki fiskalnej i monetarnej jako przedmiot badań makroekonomii gospodarki otwartej

2015 ◽  
pp. 93-116
Author(s):  
Agnieszka Domańska
Keyword(s):  
Monetary Policy ◽  
General Equilibrium ◽  
Open Economy ◽  
Research Method ◽  
Stochastic Dynamic ◽  
Monetary Policy Shocks ◽  
Modern Approach ◽  
Policy Shocks ◽  
The Subject ◽  
Fiscal And Monetary Policy

The aim of this study is to present selected aspects of fiscal and monetary policy shocks as the subject of studies of open economy macroeconomics. The study concentrates on the development of the model presentation (evolution of the research method) in description of fiscal and monetary policy shocks, with a focus on the modern quantitative approach. At present the modern approach to the research on fiscal and monetary policy shocks is based on advanced methods of data analyzing, such as autoregressive models (VAR), or stochastic dynamic general equilibrium models (DSGE)

Fiscal and Monetary Policy in Open Economy

2020 ◽  
Author(s):  
Andrea Ferrero
Keyword(s):  
Monetary Policy ◽  
Open Economy ◽  
Fiscal Rules ◽  
Adjustment Process ◽  
Optimal Monetary Policy ◽  
Monetary Policies ◽  
Fiscal Adjustment ◽  
Trade Offs ◽  
Fiscal And Monetary Policy ◽  
Policy Targets

The development of a simple framework with optimizing agents and nominal rigidities is the point of departure for the analysis of three questions about fiscal and monetary policies in an open economy. The first question concerns the optimal monetary policy targets in a world with trade and financial links. In the baseline model, the optimal cooperative monetary policy is fully inward-looking and seeks to stabilize a combination of domestic inflation and output gap. The equivalence with the closed economy case, however, ends if countries do not cooperate, if firms price goods in the currency of the market of destination, and if international financial markets are incomplete. In these cases, external variables that capture international misalignments relative to the first best become relevant policy targets. The second question is about the empirical evidence on the international transmission of government spending shocks. In response to a positive innovation, the real exchange rate depreciates and the trade balance deteriorates. Standard open economy models struggle to match this evidence. Non-standard consumption preferences and a detailed fiscal adjustment process constitute two ways to address the puzzle. The third question deals with the trade-offs associated with an active use of fiscal policy for stabilization purposes in a currency union. The optimal policy assignment mandates the monetary authority to stabilize union-wide aggregates and the national fiscal authorities to respond to country-specific shocks. Permanent changes of government debt allow to smooth the distortionary effects of volatile taxes. Clear and credible fiscal rules may be able to strike the appropriate balance between stabilization objectives and moral hazard issues.

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