• DOI:10.1111/J.1465-7295.1987.TB00764.X
Corpus ID: 150484574

Rules and Discretion with Non-coordinated Monetary and Fiscal Policy

@article{Alesina1987RulesAD,
  title={Rules and Discretion with Non-coordinated Monetary and Fiscal Policy},
  author={A. Alesina and G. Tabellini},
  journal={Economic Inquiry},
  year={1987},
  volume={25}
}

A. Alesina, G. Tabellini

Published 1987

Economics

Economic Inquiry

The time inconsistency of optimal monetary policy is due to the effects of tax distortions. Thus, the issue of how to im prove upon the time-consistent suboptimal monetary policy is related to that of the coordination of monetary and fiscal policy. The author s present a model with three players (the central bank, the fiscal au thority, and wage setters) in which distortionary taxes are explicitl y modeled. They show that binding commitments to monetary rules are n ot necessarily welfare… CONTINUE READING

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