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Disinflation, External Vulnerability, and Fiscal Intransigence : Some Unpleasant Mundellian Arithmetic

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Title: Disinflation, External Vulnerability, and Fiscal Intransigence : Some Unpleasant Mundellian Arithmetic
Description: This paper examines the policy challenges a country faces when it wants to both reduce inflation and maintain a sustainable external position. Mundell's (1962) policy assignment framework suggests that these two goals may be mutually incompatible unless monetary and fiscal policies are properly coordinated. Unfortunately, if the fiscal authority is unwilling to cooperate—a case of fiscal intransigence—central banks that pursue a disinflation on a ‘go it alone'basis will cause the country's external position to further deteriorate. A dynamic analysis shows that if the central bank itself lacks credibility in its inflation goal, it must rely even more on cooperation from the fiscal authority than otherwise. Echoing Sargent and Wallace's (1981) ‘unpleasant monetarist arithmetic,'in these circumstances, a ‘go it alone'policy may successfully stabilize prices and output, but only on a short-term basis.
Authors: Tanner, Evan C.
Resource Type: eBook.
Subjects: Capitalism--Mathematical models, Macroeconomics--Mathematical models, Economic policy--Mathematical models, Economic development--Mathematical models, Fiscal policy--Mathematical models, Monetary policy--Mathematical models
Categories: BUSINESS & ECONOMICS / Economics / Macroeconomics, BUSINESS & ECONOMICS / Economics / General, BUSINESS & ECONOMICS / International / Economics & Trade
Database: eBook Collection (EBSCOhost)
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Header DbId: nlebk
DbLabel: eBook Collection (EBSCOhost)
An: 1529313
RelevancyScore: 1077
AccessLevel: 6
PubType: eBook
PubTypeId: ebook
PreciseRelevancyScore: 1077.00524902344
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  Data: Disinflation, External Vulnerability, and Fiscal Intransigence : Some Unpleasant Mundellian Arithmetic
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  Label: Description
  Group: Ab
  Data: This paper examines the policy challenges a country faces when it wants to both reduce inflation and maintain a sustainable external position. Mundell's (1962) policy assignment framework suggests that these two goals may be mutually incompatible unless monetary and fiscal policies are properly coordinated. Unfortunately, if the fiscal authority is unwilling to cooperate—a case of fiscal intransigence—central banks that pursue a disinflation on a ‘go it alone'basis will cause the country's external position to further deteriorate. A dynamic analysis shows that if the central bank itself lacks credibility in its inflation goal, it must rely even more on cooperation from the fiscal authority than otherwise. Echoing Sargent and Wallace's (1981) ‘unpleasant monetarist arithmetic,'in these circumstances, a ‘go it alone'policy may successfully stabilize prices and output, but only on a short-term basis.
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RecordInfo BibRecord:
  BibEntity:
    Classifications:
      – Code: 339.50151
        Scheme: ddc
        Type: prePub
    Languages:
      – Code: eng
        Text: English
    Subjects:
      – SubjectFull: Capitalism--Mathematical models
        Type: general
      – SubjectFull: Macroeconomics--Mathematical models
        Type: general
      – SubjectFull: Economic policy--Mathematical models
        Type: general
      – SubjectFull: Economic development--Mathematical models
        Type: general
      – SubjectFull: Fiscal policy--Mathematical models
        Type: general
      – SubjectFull: Monetary policy--Mathematical models
        Type: general
    Titles:
      – TitleFull: Disinflation, External Vulnerability, and Fiscal Intransigence : Some Unpleasant Mundellian Arithmetic
        Type: main
  BibRelationships:
    HasContributorRelationships:
      – PersonEntity:
          Name:
            NameFull: Tanner, Evan C.
      – PersonEntity:
          Name:
            NameFull: Tanner, Evan C.
    IsPartOfRelationships:
      – BibEntity:
          Dates:
            – D: 01
              M: 01
              Type: published
              Y: 2017
            – D: 10
              M: 10
              Type: profile
              Y: 2018
          Identifiers:
            – Type: isbn-print
              Value: 9781484300640
            – Type: isbn-electronic
              Value: 9781484301203
          Numbering:
            – Type: volume
              Value: 00017
          Titles:
            – TitleFull: Disinflation, External Vulnerability, and Fiscal Intransigence : Some Unpleasant Mundellian Arithmetic
              Type: main
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