The fiscal policy environment central banks operate in can be radically different with respect to debt levels, maturity structures and whether or not fiscal adjustments are spending or tax based. Despite this, most analyses of monetary policy delegation schemes typically ignore the behavior of...

This paper develops the theoretical framework and studies discretionary non-cooperative monetary and fiscal policy stabilisation in a New Keynesian model, where the fiscal policymaker uses distortionary taxes as the policy instrument and operates with long periods between optimal adjustments of...

We consider monetary and fiscal policy interactions in a New-Keynesian model of a closed economy with a government solvency constraint. We study the problem of optimal delegation in the discretionary game with two optimising policymakers and provide a welfare ranking of different leadership...