Based on the hypothesis that rules of monetary and fiscal policy in Brazil may have been subject to different regimes, present study applies Leeper model (1991 2005) identify chronology regimes terms their active passive character. The are estimated using Markov-switching model, with a monthly database from November 2002 December 2015, which endogenously determined. results obtained indicate do...

When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use ine¢ cient policies such as wasteful public spending or future commitments to in‡ate. We conclude that in the New Keynesian model,...

The paper shows that common fiscal rules, such as a limit to the deficit-output ratio, induce an ‘‘escape clause’’–type fiscal policy, similar to that studied for monetary policy by Flood and Isard (1988 and 1989) and Lohmann (1992): The government resorts to an active stabilization (for example, countercyclical) policy only during ‘‘exceptional times’’ by running deficits in recession phases a...

Both monetary and fiscal instruments have been continuously and rather systematically used in Swedish stabilization policy during the entire postwar period. The policy has relied mainly on rather conventional "Keynesian" tools of fiscal and monetary policy: variations in public spending and taxation, interest rate variations, and attempts to influence the supply of credit and money. It may be o...

Using an estimated DSGE model that features monetary and fiscal policy interactions and allows for equilibrium indeterminacy, we find that a passive monetary and passive fiscal policy regime prevailed in the pre-Volcker period while an active monetary and passive fiscal policy regime prevailed post-Volcker. Since both monetary and fiscal policies were passive pre-Volcker, there was equilibrium ...

We investigate the effects of fiscal policy surprises for US data, using vector autoregressions. We overcome the difficulties that changes in fiscal policy may manifest themselves in variables other than fiscal variables first and that fiscal variables may respond ”automatically” to business cycle conditions. We do so by using sign restrictions on the impulse responses as method of identificati...

We postulate a new method of measuring debt which we call the debt burden (DB). We claim that DB reveals the true debt obligations of the fiscal authority by taking the intertemporal debt obligations of the government into account. It is more accurate and more transparent than the currently used methods of assessing debt. DB is calculated on a daily basis and it clearly identifies debt risks. I...

We study optimal monetary and fiscal policies in a New Keynesian model with heterogeneous agents, incomplete markets, nominal rigidities. Our approach uses small‐noise expansions Fréchet derivatives to approximate equilibria quickly efficiently. Responses of aggregate shocks differ qualitatively from what they would be corresponding representative agent economy are an order magnitude larger. A ...