This paper studies the issue of equilibrium determinacy under monetary and fiscal policy feedback rules in an optimizing general equilibrium model with overlapping generations and flexible prices. It is shown that equilibria may be determinate also when monetary and fiscal policies are both passive. In particular, under passive monetary rules equilibrium uniqueness is more likely to be verified when fiscal policies are less committed to public debt stabilization.
Piergallini, A. (2004). Macroeconomic policies and equilibrium determinacy.
Macroeconomic policies and equilibrium determinacy
PIERGALLINI, ALESSANDRO
2004-10-01
Abstract
This paper studies the issue of equilibrium determinacy under monetary and fiscal policy feedback rules in an optimizing general equilibrium model with overlapping generations and flexible prices. It is shown that equilibria may be determinate also when monetary and fiscal policies are both passive. In particular, under passive monetary rules equilibrium uniqueness is more likely to be verified when fiscal policies are less committed to public debt stabilization.File in questo prodotto:
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