TY - JOUR
T1 - Optimal fiscal and monetary policy
T2 - equivalence results
AU - Correia, Isabel
AU - Nicolini, Juan Pablo
AU - Teles, Pedro
PY - 2008/2
Y1 - 2008/2
N2 - In this article, we analyze the implications of price-setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider standard monetary economies that differ in the price-setting restrictions imposed on the firms. We show that, independently of the degree or type of price stickiness, it is possible to implement the same efficient set of allocations and that each allocation in that set is implemented with policies that are also independent of the price stickiness. In this sense, environments with different price-setting restrictions are equivalent.
AB - In this article, we analyze the implications of price-setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider standard monetary economies that differ in the price-setting restrictions imposed on the firms. We show that, independently of the degree or type of price stickiness, it is possible to implement the same efficient set of allocations and that each allocation in that set is implemented with policies that are also independent of the price stickiness. In this sense, environments with different price-setting restrictions are equivalent.
UR - http://www.scopus.com/inward/record.url?scp=41249102440&partnerID=8YFLogxK
U2 - 10.1086/533504
DO - 10.1086/533504
M3 - Article
AN - SCOPUS:41249102440
SN - 0022-3808
VL - 116
SP - 141
EP - 170
JO - Journal of Political Economy
JF - Journal of Political Economy
IS - 1
ER -
