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Preprints, Working Papers, ... Year : 2018

Fiscal and Monetary Regime: A Strategic Approach

Jean Barthélemy
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  • IdRef : 175982732
Guillaume Plantin

Abstract

This paper develops a full-fledged strategic analysis of Wallace's "game of chicken". A public sector facing legacy nominal liabilities is comprised of fiscal and monetary authorities that respectively set the primary surplus and the price level in a non-cooperative fashion. We find that the post 2008 feature of indefinitely postponed fiscal consolidation and rapid expansion of the Federal Reserve's balance sheet is consistent with a strategic setting in which neither authority can commit to a policy beyond its current mandate, and the fiscal authority moves before the monetary one at each date.
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hal-03815028 , version 1 (14-10-2022)

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  • HAL Id : hal-03815028 , version 1

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Jean Barthélemy, Guillaume Plantin. Fiscal and Monetary Regime: A Strategic Approach. 2018. ⟨hal-03815028⟩
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