Monetary and fiscal regimes policy rules in a discrete time model

Norlin Khalid, (2018) Monetary and fiscal regimes policy rules in a discrete time model. Jurnal Ekonomi Malaysia, 52 (2). pp. 95-108. ISSN 0127-1962


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This paper determines how fiscal policy rule interacts with monetary policy rule affect the conditions of equilibrium determinacy when moving from continuous to discrete time. The monetary authority follows an interest rate-targeting rule while the fiscal authority follows a debt-targeting rule. It is shown that the local determinacy of an equilibrium path is determinate under the active monetary/passive fiscal regime, while the examination of other regimes is shown to be indeterminate. These findings are in stark contrast with the case of the continuous time model, suggesting that the timing assumptions play an important role in determining local equilibrium.

Item Type:Article
Keywords:Monetary policy; Fiscal policy; Equilibrium indeterminacy
Journal:Jurnal Ekonomi Malaysia
ID Code:19796
Deposited By: ms aida -
Deposited On:15 Sep 2022 00:52
Last Modified:21 Sep 2022 06:48

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