Monetary and fiscal regimes policy rules in a discrete time model

Research output: Contribution to journalArticle

Abstract

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.

Original languageEnglish
JournalJurnal Ekonomi Malaysia
Volume52
Issue number2
Publication statusPublished - 1 Jan 2018

Fingerprint

Monetary regimes
Authority
Targeting rules
Fiscal regimes
Discrete-time model
Policy rules
Discrete-time
Fiscal
Fiscal policy rules
Equilibrium determinacy
Debt
Determinacy
Continuous-time model
Interest rates
Monetary policy rules

Keywords

  • Equilibrium indeterminacy
  • Fiscal policy
  • Monetary policy

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Monetary and fiscal regimes policy rules in a discrete time model. / Khalid, Norlin.

In: Jurnal Ekonomi Malaysia, Vol. 52, No. 2, 01.01.2018.

Research output: Contribution to journalArticle

@article{53d9aab1885d49a3a1a4ee61cc69ab98,
title = "Monetary and fiscal regimes policy rules in a discrete time model",
abstract = "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.",
keywords = "Equilibrium indeterminacy, Fiscal policy, Monetary policy",
author = "Norlin Khalid",
year = "2018",
month = "1",
day = "1",
language = "English",
volume = "52",
journal = "Jurnal Ekonomi Malaysia",
issn = "0126-1962",
publisher = "Penerbit Universiti Kebangsaan Malaysia",
number = "2",

}

TY - JOUR

T1 - Monetary and fiscal regimes policy rules in a discrete time model

AU - Khalid, Norlin

PY - 2018/1/1

Y1 - 2018/1/1

N2 - 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.

AB - 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.

KW - Equilibrium indeterminacy

KW - Fiscal policy

KW - Monetary policy

UR - http://www.scopus.com/inward/record.url?scp=85057480251&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85057480251&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:85057480251

VL - 52

JO - Jurnal Ekonomi Malaysia

JF - Jurnal Ekonomi Malaysia

SN - 0126-1962

IS - 2

ER -