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dc.contributor.authorChadha, Jagjit S.en_US
dc.date.accessioned2010-12-28en_US
dc.date.accessioned2011-10-21T16:52:37Z-
dc.date.available2011-10-21T16:52:37Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/50569-
dc.description.abstractPrice-level determination requires co-ordination of monetary and fiscal policy to ensure a unique rational expectations equilibrium (REE). This paper derives a number of implications for simple interest rate rules resulting from various fiscal strategies. We show that fiscal choices under either the monetary theory of the price-level (MTPL) and the fiscal theory of the price-level (FTPL) can challenge widely accepted principles of monetary policy. Specifically, we show that a fiscal rule that responds aggressively to output and inflation may force the monetary authorities to adopt significantly more aggressive output and inflation stabilization policy than suggested by the Taylor Principle. We also show how when monetary policy is severely constrained, the fiscal policy maker can act to stabilise the economy. Some policy conclusions in light of the lower zero bound for monetary policy and debt stabilization are drawn.en_US
dc.language.isoengen_US
dc.publisherUniv. of Kent, School of Economics Canterburyen_US
dc.relation.ispartofseriesSchool of Economics discussion papers 10,13en_US
dc.subject.jelE21en_US
dc.subject.jelE32en_US
dc.subject.jelE52en_US
dc.subject.jelE63en_US
dc.subject.ddc330en_US
dc.subject.keywordmonetary and fiscal policy rulesen_US
dc.subject.keywordRicardian fiscal policyen_US
dc.subject.keywordnon-Ricardian fiscal policyen_US
dc.titlePolicy rules under the monetary and the fiscal theories of the price-levelen_US
dc.typeWorking Paperen_US
dc.identifier.ppn642533474en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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