Analyzing the interaction of monetary and fiscal policy: Does fiscal policy play a valuable role in stabilisation?

Muscatelli, V. A. and Tirelli, P. (2005) Analyzing the interaction of monetary and fiscal policy: Does fiscal policy play a valuable role in stabilisation? CESIFO Economic Studies, 51(4), pp. 549-585. (doi: 10.1093/cesifo/51.4.549)

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Abstract

This paper provides an overview of recent papers which use estimated New Keynesian models to study the extent to which fiscal policy can beused to stabilize the economy. We use a varietyof different New Keynesian models, estimated on data for both theUS and for theEuro area, and highlight the diverse transmission channelst hrough which fiscal policy acts in these models. Although we find that fiscal policy can provide a useful complement to monetary policy, especially in models where consumers have finite horizons, there are import limitations to the value added of fiscal policy.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Muscatelli, Professor Anton
Authors: Muscatelli, V. A., and Tirelli, P.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:CESIFO Economic Studies
Publisher:Oxford University Press
ISSN:1610-241X
ISSN (Online):1612-7501

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