Citation

Discussion Paper Details

Please find the details for DP246 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Monetary Policy and Fiscal Policy: Impact Effects with a New Keynesian `Assignment' of Weapons to Targets

Author(s): James Meade and David Vines

Publication Date: June 1988

Keyword(s): Fiscal Policy, Inflation, Monetary Policy and National Wealth

Programme Area(s): International Macroeconomics

Abstract: This paper considers fiscal and monetary policy in a short-run static macroeconomic model. There are two objectives, control of inflation and control over the growth of national wealth, and a third outcome of importance, a high level of employment. There are two instruments, monetary policy (the short-term interest rate) and fiscal policy (the rate of income tax). The assignment problem considers whether fiscal policy should be used to control inflation, leaving monetary policy to affect the accumulation of wealth, or whether these roles should be reversed. We consider 'pure' and 'mixed' assignments. The analysis shows that the appropriate assignment will depend fundamentally on the relative strengths of demand-pull and cost-push factors in the determination of wages.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=246

Bibliographic Reference

Meade, J and Vines, D. 1988. 'Monetary Policy and Fiscal Policy: Impact Effects with a New Keynesian `Assignment' of Weapons to Targets'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=246