Monetary-Fiscal Policy Interactions and Indeterminacy in Postwar US Data
2012 ◽
Vol 102
(3)
◽
pp. 173-178
◽
Keyword(s):
Lump Sum
◽
Using a micro-founded model and a likelihood-based inference method, we show that while a passive monetary and passive fiscal policy regime prevailed in the U.S. before Paul Volcker's chairmanship at the Federal Reserve, an active monetary and passive fiscal policy regime prevailed after his appointment. Since both monetary and fiscal policies were passive pre-Volcker, equilibrium indeterminacy was a feature of the economy. Finally, pre-Volcker, the effects of unanticipated policy shifts were substantially different from those predicted by conventional monetary models: unanticipated increases in interest rates increased inflation and output, while unanticipated increases in lump-sum taxes decreased inflation and output.
2016 ◽
Vol 4
(1)
◽
pp. 107
Keyword(s):
2010 ◽
Vol 24
(4)
◽
pp. 141-164
◽
2014 ◽
Vol 62
(2)
◽
pp. 373-381
Keyword(s):
2021 ◽
Vol 1864
(1)
◽
pp. 012040
Keyword(s):
2010 ◽
Vol 7
(1)
◽
pp. 7-30
◽
Keyword(s):
2014 ◽
Vol 42
(4)
◽
pp. 1079-1091
◽
1987 ◽
Vol 25
(1)
◽
pp. 27-42
◽