Fed in Print
All Title Author Abstract Keywords
Bank Series Content Type Author JEL Classification Keyword

Working Paper

The time consistency of monetary and fiscal policies


Abstract: Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under commitment the Friedman rule of setting nominal interest rates to zero is optimal. This result is of applied interest because the Friedman rule is optimal for the standard preferences used in applied work, those consistent with the growth facts. (Replaced by Staff Report No: 305)

Keywords: Monetary policy; Fiscal policy; Interest rates;

Access Documents

File(s): http://www.minneapolisfed.org/research/common/pub_detail.cfm?pb_autonum_id=857

Authors

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Working Papers

Publication Date: 2002

Number: 616