Arbeitspapier
Fiscal Policy Under Inflation Targeting
The paper discusses the role of fiscal policy as an instrument for macroeconomic stabilisation when monetary policy pursues inflation targeting. Within a theoretical model of an open economy with a traded and non-traded sector, we show that inflation targeting may lead to large sectoral imbalances when fiscal policy is passive. There is a potentially large welfare gain from an active fiscal policy, in particular when sectoral stability is included in the welfare function. However, with reasonable parameter values, a small cost of adjusting fiscal policy reduces the optimal degree of activism considerably. The reason is that a given change in output requires a large change in the fiscal policy stance under inflation targeting, because of the monetary policy reaction function.
- ISBN
-
82-7553-174-8
- Sprache
-
Englisch
- Erschienen in
-
Series: Arbeidsnotat ; No. 2000/15
- Klassifikation
-
Wirtschaft
Monetary Policy
Fiscal Policy
Open Economy Macroeconomics
- Thema
-
inflation targeting
fiscal policy
monetary policy
small open economy
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Røisland, Øistein
Torvik, Ragnar
- Ereignis
-
Veröffentlichung
- (wer)
-
Norges Bank
- (wo)
-
Oslo
- (wann)
-
2000
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Røisland, Øistein
- Torvik, Ragnar
- Norges Bank
Entstanden
- 2000
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