Rules, discretion, and international monetary and fiscal policy coordination

Bryson, Jay H.; Jensen, Henrik; Hoose, David D. Van

doi:10.1007/bf01000515

Cited by 26 publications

(9 citation statements)

References 6 publications

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“…The demand for the output of a firm in sector i as a share of aggregate domestic output is where m is the log of the money stock and the log of velocity has been normalized at a value of zero. The domestic nation's incomeexpenditure equilibrium condition (for a derivation, see, for instance, Canzoneri and Henderson, 1991;or Bryson et al, 1993) is given by…”

mentioning

confidence: 99%

Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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Considerable recent work has reached mixed conclusions about whether and how globalization affects the inflation-output trade-off and suggests that the ultimate effect of openness on the output-inflation relationship is influenced by a variety of factors. In this paper, we consider the impact of exchange-rate pass through and examine how pass through conditions the effect of openness on the sacrifice ratio. We develop a simple theoretical model showing how the extent of both pass through and openness can interact to influence the output-inflation relationship. Next we empirically explore the nature of these two variables and their interaction. Results indicate that greater pass through increases the sacrifice ratio, that there is statistically significant interaction between pass through and openness, andonce the extent of pass through is taken into account alongside other factors that affect the sacrifice ratio, such as central bank independence-openness fails to exert an empirically robust effect on the sacrifice ratio.

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confidence: 99%

Exchange-rate pass through, openness, and the sacrifice ratio

Daniels

VanHoose

2013

Journal of International Money and Finance

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“…Moreover, we extend the closed-economy framework used in the above literature to consider a monetary union with fiscal externalities. In this sense, our paper is also related to those of Bryson et al (1993), Banerjee (2001), Dixit (2001) and Dixit and Lambertini (2001, 2003a, 2003b which also deal with credibility problems in monetary policy within a currency area. However, in contrast with these articles, our paper focuses on how the optimal design of the monetary institutions interacts with the implementation of fiscal policy 4 .…”

Section: Juan Cristóbal Campoy and Juan Carlos Negretementioning

confidence: 99%

“…As in Alesina and Tabellini (1987) we assume that public budgets are balanced (t i = g i ). In this way, our paper sets aside the issue of deficits and sustainability of public debts (as in Bryson et al, 1993;Banerjee, 2001;Dixit, 2001;Dixit and Lambertini, 2001, 2003a,b or Hefeker and Zimmer, 2011.…”

Section: The Modelmentioning

confidence: 99%

Distortionary Taxation and Central Bank Design

Campoy¹,

Negrete²

2017

HPE-RPE

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We consider a monetary union where distortionary taxation leads to the classical inflation bias in discretionary monetary policy. We show that a more generous welfare state requires a more conservative central bank. This result rationalizes the perception that the European Central Bank is more focused than the U.S. Federal Reserve on putting a lid on inflation but less worried about deflation. Besides, when an economic crisis increases the welfare state costs for countries in the periphery of the union, making the common central bank more conservative will improve welfare not only in the core countries but also in the periphery.

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“…The domestic nation's income-expenditure equilibrium condition (for a derivation of this Cobb-Douglas approximation, see, for instance, Canzoneri and Henderson, 1991;or Bryson et al, 1993) is given by = ( * + − ) + (1 − ) + * (2) NOT THE PUBLISHED VERSION; this is the author's final, peer-reviewed manuscript. The published version may be accessed by following the link in the citation at the bottom of the page.…”

Section: A Model Of the Interplay Among Openness Progressive Taxatiomentioning

confidence: 99%

Openness, income-tax progressivity, and inflation

Daniels

VanHoose

2009

Journal of Macroeconomics

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This paper considers a model of an open economy in which the degree of income-tax progressivity influences the interaction among openness, central bank independence, and the inflation rate. Our model suggests that an increase in the progressivity of the tax system induces a smaller response in real output to a change in the price level. This implies that increased incometax progressivity reduces the equilibrium inflation rate and that the effect of increased income-tax progressivity on inflation is smaller when the central bank places a higher weight on inflation or when there is greater openness. Examination of cross-country inflation data provides empirical support for these key predictions.

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Rules, discretion, and international monetary and fiscal policy coordination

Cited by 26 publications

References 6 publications

Exchange-rate pass through, openness, and the sacrifice ratio

Exchange-rate pass through, openness, and the sacrifice ratio

Distortionary Taxation and Central Bank Design

Openness, income-tax progressivity, and inflation

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