Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103830
Authors: 
Adam, Klaus
Billi, Roberto M.
Year of Publication: 
2013
Series/Report no.: 
Sveriges Riksbank Working Paper Series 278
Abstract: 
We reconsider the role of an inflation conservative central banker in a setting with distortionary taxation. To do so, we assume monetary and fiscal policy are decided by independent authorities that do not abide to past commitments. If the two authorities make policy decisions simultaneously, inflation conservatism causes fiscal overspending. But if fiscal policy is determined before monetary policy, inflation conservatism imposes fiscal discipline. These results clarify that in our setting the value of inflation conservatism depends crucially on the timing of policy decisions.
Subjects: 
optimal policy
lack of commitment
conservative monetary policy
JEL: 
E52
E62
E63
Document Type: 
Working Paper

Files in This Item:
File
Size
246.95 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.