Monetary and Fiscal Policy Under Perfect Foresight: A Symmetric Two Country Analysis / Stephen J. Turnovsky.

Format:

Book

Author/Creator:

Turnovsky, Stephen J.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1699.

NBER working paper series no. w1699

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Monetary and Fiscal Policy Under Perfect Foresight

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1985.

Summary:

This paper analyzes the effects of anticipated and unanticipated domestic monetary and fiscal expansions on both the domestic and foreign economies. The analysis is based on symmetric behavior, which is not only not an unreasonable first approximation, but also offers significant analytical advantages. Specifically, it enables the dynamics of the system to be decoupled into (a) averages and (b) differences of relevant variables. Not only does this render the analysis tractable, but it also helps provide economic insight. One striking aspect is that the differences, but not the averages, respond to announcements. The consequences of this for the dynamic adjustments of the two economies to the various disturbances are discussed at length.

Notes:

Print version record

September 1985.