In times of rapid macroeconomic change it would seem useful for both fiscal and monetary policy to be modified frequently. This is true for monetary policy with monthly meetings of the Open Market Committee. It is not true for fiscal policy which mostly varies with the annual Congressional budget cycle. This paper proposes a feedback framework for analyzing the question of whether or not moveme...

We consider leadership equilibria in dynamic linear rational expectations models with specific reference to monetary and fiscal policy interactions. We pay particular attention to the strategic relationships between policymakers and the private sector. We find that in a dynamic game that although leadership may not matter much, giving leadership to a constrained policymaker should be avoided.

Describing the reasons for the policy actions of the Federal Reserve has long been a popular topic for economists, economic journalists, investors, and others. In particular, there is keen interest in what economists call the Fed's implied "reaction function," which models how the Fed sets monetary policy in response to conditions in the economy. This interest is not surprising given that the r...

This paper has considered an issue which only a few considered in the literature on harmonization of regional fiscal policies. The lack of attention paid to location distortions may reflect the sense that few individuals actually move to different states or countries because of differences in fiscal policies. This study confirms this view for the U.S.; for the U.S. economy as a whole the distor...

Studies of the effect of government spending on unemployment are potentially confounded by reverse causality. To address the endogeneity problem, we exploit variation in a porkbarrel road-building program, and find that higher government expenditure on road-building substantially reduces local unemployment. JEL Codes: E24, E62, H30, H54,

This paper is an attempt to investigate the effect of fiscal policy on output in Indonesia using Structural Vector Autoregression (SVAR) methodology for the period 1983:1 – 2010:1. We use contemporaneous restriction and follow Blanchard and Perotti (1999) technique to identify structural fiscal policy shocks in Indonesia. The estimation results show that the government spending shocks are found...

In recent years, inequality has risen in the region alongside rapid economic growth. The widening income gap strengthens the case for a government response, and fiscal policy is one of the most suitable policy instruments to promote a more equitable society that provides opportunities for all. Developing Asia has trailed other parts of the world in equity-promoting fiscal expenditures, namely e...

In most cases authors are permitted to post their version of the article (e.g. in Word or Tex form) to their personal website or institutional repository. Authors requiring further information regarding Elsevier's archiving and manuscript policies are encouraged to visit: JEL classification: E32 E52 E62 E63 Keywords: Optimal simple policy rules Timeless perspective optimal policy Monetary polic...

We investigate whether fiscal rules help to reduce the extent of policy procyclicalitydhow government expenditure policy responds to GDP– in a dynamic panel framework with 81 advanced, emerging and developing countries over 1985e2012. We construct two new fiscal rule indices and investigate whether rules help to dampen procyclical policies. We condition our empirical specifications on the degre...