This paper investigates the stabilization bias that arises in a model of monetary and fiscal policy stabilization of the economy, when assuming that the monetary authority put higher weight on inflation stabilization than society. We demonstrate that inflation-conservatism unambiguously leads to...

Working with a typical macroeconomic model we investigate the superiority of timeless perspective policy design. We show that when fiscal policy matters the timeless perspective policy design can cause instability of the economy

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...