Commitment vs. discretion in the UK: An empirical investigation of the monetary and fiscal policy regime

Kirsanova, T. and le Roux, S. (2013) Commitment vs. discretion in the UK: An empirical investigation of the monetary and fiscal policy regime. International Journal of Central Banking, 9(4), pp. 99-151.

Kirsanova, T. and le Roux, S. (2013) Commitment vs. discretion in the UK: An empirical investigation of the monetary and fiscal policy regime. International Journal of Central Banking, 9(4), pp. 99-151.

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Publisher's URL: http://www.ijcb.org/journal/ijcb13q4a4.htm

Abstract

This paper investigates the conduct of monetary and fiscal policy in the post-ERM period in the United Kingdom. Using a simple DSGE New Keynesian model of non-cooperative monetary and fiscal policy interactions under fiscal intraperiod leadership, we demonstrate that the past policy in the United Kingdom is better explained by optimal policy under discretion than under commitment. We estimate policy objectives of both policymakers. We demonstrate that fiscal policy plays an important role in identifying the monetary policy regime.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Kirsanova, Professor Tatiana
Authors: Kirsanova, T., and le Roux, S.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:International Journal of Central Banking
ISSN:1815-4654

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