Optimal fiscal and monetary policy action in a closed economy

Philippopoulos, A., Varthalitis, P. and Vassilatos, V. (2015) Optimal fiscal and monetary policy action in a closed economy. Economic Modelling, 48, pp. 175-188. (doi: 10.1016/j.econmod.2014.10.045)

Abstract

We study optimized monetary and fiscal feedback policy rules. The setup is a New Keynesian DSGE model of a closed economy which is solved numerically using common parameter values and fiscal data from the Euro area. Our aim is to welfare rank alternative tax-spending policy instruments used for shock stabilization and debt consolidation when, at the same time, the monetary authorities can follow a Taylor rule for the nominal interest rate.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Varthalitis, Dr Petros and Philippopoulos, Prof Apostolis
• Authors: Philippopoulos, A., Varthalitis, P., and Vassilatos, V.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Economic Modelling
• Publisher: Elsevier B.V.
• ISSN: 0264-9993
• ISSN (Online): 1873-6122
• Copyright Holders: Copyright © 2014 Elsevier B.V.
• First Published: First published in Economic modelling 48:175-188
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher