Shotgun Wedding: Fiscal and Monetary Policy / Marco Bassetto, Thomas J. Sargent.

Format:

Book

Author/Creator:

Bassetto, Marco.

Contributor:

National Bureau of Economic Research.

Sargent, Thomas J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27004.

NBER working paper series no. w27004

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

This paper describes interactions between monetary and fiscal policies that affect equilibrium price levels and interest rates by critically surveying theories about (a) optimal anticipated inflation, (b) optimal unanticipated inflation, and (c) conditions that secure a "nominal anchor'' in the sense of a unique price level path. We contrast incomplete theories whose inputs are budget-feasible sequences of government issued bonds and money with complete theories whose inputs are bond-money strategies described as sequences of functions that map time t histories into time t government actions. We cite historical episodes that confirm the theoretical insight that lines of authority between a Treasury and a Central Bank can be ambiguous, obscure, and fragile.

Notes:

Print version record

April 2020.