Series: IMF Working Papers
Author(s): Michael Kumhof , and Huixin Bi
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 December 2009
Keywords: Optimal simple rules, monetary policy rules, fiscal policy rules, welfare analysis, borrowing constraints, tax revenue, inflation, government spending,
We study the welfare properties of an economy where both monetary and fiscal policy follow simple rules, and where a subset of agents is borrowing constrained. The optimized fiscal rule is far more aggressive than...