This paper analyzes the impact of alternative policy scenarios in the aftermath of the financial crisis. The policy challenges that are considered cover a broad range of issues—from securing a sound financial sector and sustaining public investments to supporting future productivity developments, avoiding protectionist policies that would decrease the degree of competition in goods and labor ma...

This note characterises the evolution of Chile’s public debt, and discusses its implications for the management of the country’s monetary policy. Historically, the main issuer of public debt in Chile was the central bank. The government, in turn, has recently started to engage in a more active debt policy, with the aim of deepening the market for risk-free securities and diversifying its fundin...

In theory, the IMF could influence fiscal and monetary policy via several channels, among them advice to policy makers, conditionality, and moral hazard it induces with the borrowers. This paper tries to disentangle those effects empirically. Using panel data for 98 countries over the period 1975-2000 it analyzes whether IMF involvement indeed influences fiscal and monetary policy in program co...

This paper shows that optimal fiscal and monetary policy is generally time consistent in a standard small open economy. Further, there exist many maturity structures of public debt capable of rendering the optimal policy time consistent. This result is in sharp contrast with that obtained by others in the context of closedeconomy models. In the closed economy, the time consistency of optimal mo...

This article derives optimal fiscal rules within a stochastic model of Keynesian type in the context of Poole (1970) analysis. By using optimal control theory and applying the Hamilton-Jacoby-Bellman equation, we extend the original Poole results concerning the output stabilization properties of monetary policy to the case of fiscal policy. In particular, we look for the optimal setting of gove...