• Economics
  • Published 2011

Monetary and Fiscal Policy in a DSGE Model of India

@inproceedings{Levine2011MonetaryAF,
  title={Monetary and Fiscal Policy in a DSGE Model of India},
  author={Paul Levine and Joseph Pearlman},
  year={2011}
}
We develop a optimal rules-based interpretation of the 'three pillars macroeconomic policy framework': a combination of a freely floating exchange rate, an explict target for inflation, and a mechanism than ensures a stable government debt-GDP ratio around a specified long run. We show how such monetary-fiscal rules need to be adjusted to accommodate specific features of emerging market economies.The model takes the form of two-blocs, a DSGE emerging small open economy interacting with the rest… CONTINUE READING

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