The last few years papers have begun to analyse optimal monetary and fiscal policy in models incorporating nominal rigidities where social welfare is derived from the utility of agents. This paper examines whether this analysis provides support for the consensus assignment, where monetary policy...

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...