Eser, Fabian - Department of Economics, Oxford University - 2009
a Taylor rule, a stabilisation role for fiscal policy emerges. Fiscal policy should 'lean against' inflation and be … following settings. Firstly, for the benchmark New Keynesian model, where monetary policy is unconstrained, a neutrality result … for fiscal obtains: fiscal policy should not respond to any shocks. Secondly, if monetary policy is constrained to follow …