Interaction between monetary and fiscal authorities under incomplete information

Hisashi Sawaki

Research output: Contribution to journalArticle

Abstract

This paper analyzes the interaction between monetary and fiscal authorities under incomplete information. The inflation goal of the central bank is assumed to be unknown to the fiscal authority and the public. The central bank signals the goal by choosing the first-period monetary policy before the fiscal authority joins the policy-making game. If the central bank would like the fiscal authority and the public to believe that it is wet (dry), the central bank would distort the money supply upward (downward) in order to reveal its actual type.

Original languageEnglish
Pages (from-to)202-217
Number of pages16
JournalJapanese Economic Review
Volume61
Issue number2
DOIs
Publication statusPublished - Jun 1 2010

ASJC Scopus subject areas

  • Economics and Econometrics

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