Optimal fiscal and monetary policy: some recent results

This paper studies the quantitative properties of fiscal and monetary policy in business cycle models. In terms of fiscal policy, optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average. In terms of monetary policy, the Friedman rule is optimal—nominal interest rates are zero—and optimal monetary policy is activist in the sense that it responds to shocks to the economy.

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Year of publication:	1991
Authors:	Chari, V. V. ; Christiano, Lawrence J. ; Kehoe, Patrick J.
Institutions:	Federal Reserve Bank of Minneapolis
Subject:	Fiscal policy \| Monetary policy

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Extent:	application/pdf
Series:	Staff Report.
Type of publication:	Book / Working Paper
Notes:	Published in Journal of Money, Credit, and Banking (Vol.23, n.3, Part 2, August 1991, pp. 519-539) Number 147
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005498465