Ellison, Martin and Rankin, Nell (2007) Optimal monetary policy when lump-sum taxes are unavailable : a reconsideration of the outcomes under commitment and discretion. Journal of Economic Dynamics and Control, Volume 31 (Number 1). pp. 219-243. doi:10.1016/j.jedc.2005.09.014

Research output not available from this repository, contact author.

Request Changes to record.

Abstract

We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with alternative utility functions to that considered in Nicolini's related analysis, the direction of the incentive to cheat may depend on the initial level of government debt, with low debt creating an incentive towards surprise deflation, but high debt the reverse. Under discretion, we show that the economy will not necessarily tend to the Friedman Rule, as Obstfeld found. Instead it may tend to the critical debt level at which there is no cheating incentive under commitment, and inflation and could well be positive here.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Journal of Economic Dynamics and Control
Publisher:	Elsevier BV
ISSN:	0165-1889
Official Date:	January 2007
Dates:	Date Event January 2007 Published
Volume:	Volume 31
Number:	Number 1
Number of Pages:	25
Page Range:	pp. 219-243
DOI:	10.1016/j.jedc.2005.09.014
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

Data sourced from Thomson Reuters' Web of Knowledge

Request changes or add full text files to a record

Repository staff actions (login required)

View Item