Monetary and Fiscal Policy Interactions in the Post-war U.S.

 
Author/Editor: Traum, Nora ; Yang, Shu-Chun S.
 
Publication Date: November 01, 2010
 
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Summary: A New Keynesian model allowing for an active monetary and passive fiscal policy (AMPF) regime and a passive monetary and active fiscal policy (PMAF) regime is fit to various U.S. samples from 1955 to 2007. Data in the pre-Volcker periods strongly prefer an AMPF regime, but the estimation is not very informative about whether the inflation coefficient in the interest rate rule exceeds one in pre-Volcker samples. Also, whether a government spending increase yields positive consumption in a PMAF regime depends on price stickiness. An income tax cut can yield a negative labor response if monetary policy aggressively stabilizes output.
 
Series: Working Paper No. 10/243
Subject(s): Data analysis | Economic models | Fiscal policy | Monetary policy | United States

Author's Keyword(s): Monetary and Fiscal and Monetary Policy Interactions | New Keynesian Models | Bayesian Estimation
 
English
Publication Date: November 01, 2010
Format: Paper
Stock No: WPIEA2010243 Pages: 46
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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