Fiscal Leadership and Central Bank Design

Andrew Hughes Hallett, Diana Weymark

    Research output: Contribution to journalArticlepeer-review

    15 Citations (Scopus)

    Abstract

    This article investigates the impact, on economic performance, of the timing of moves in a policy game between the government and the central bank for a government that has both redistributional and stabilization objectives. It is shown that both inflation and income inequality are reduced without sacrificing output growth if the government assumes a leadership role compared with a regime in which monetary and fiscal policy are determined simultaneously. Further, it is shown that government leadership benefits both the fiscal and monetary authorities through the enhanced coordination that this arrangement implies.

    Original languageEnglish
    Pages (from-to)607-627
    Number of pages21
    JournalCanadian Journal of Economics
    Volume40
    Issue number2
    DOIs
    Publication statusPublished - May 2007

    Keywords

    • MONETARY-UNION
    • TARGET ZONES
    • DISCRETION
    • POLICIES
    • COORDINATION
    • COMMITMENT
    • INFLATION
    • RULES

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