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Time consistency of optimal policy in a small open economy


Marketed By :  LAP LAMBERT Academic Publishing   Sold By :  Kamal Books International  
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  • Product Description

In this book, I characterize conditions under which optimal monetary and fiscal policy is time consistent in a stylized small open economy with a flexible foreign exchange rate regime. I show that these conditions depend on the way in which leisure is assumed to enter preferences and/or on the process which productivity is assumed to follow. I further argue that these conditions will fail to be sufficient if the small open economy implements a fixed foreign exchange rate regime. Thus, in a small open economy with conventional debt instruments and with households who have preference over consumption, leisure, and real money balances, it is impossible to have the following at the same time: perfect capital mobility, a credible fixed exchange rate, and time consistency of optimal fiscal policy. Finally, I discuss how to understand the long-term stability of monetary unions from the time-consistency perspective.

Product Specifications
SKU :COC74638
AuthorXuan Liu
Number of Pages56
Publishing Year2014-10-13T00:00:00.000
Edition1 st
Book TypeEconomics
Country of ManufactureIndia
Product BrandLAP LAMBERT Academic Publishing
Product Packaging InfoBox
In The Box1 Piece
Product First Available On ClickOnCare.com2015-10-08 00:00:00
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