Fiscal and Monetary Regime: A Strategic Approach

Jean Barthélemy and Guillaume Plantin ()
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Guillaume Plantin: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper develops a full-fledged strategic analysis of Wallace's "game of chicken". A public sector facing legacy nominal liabilities is comprised of fiscal and monetary authorities that respectively set the primary surplus and the price level in a non-cooperative fashion. We find that the post 2008 feature of indefinitely postponed fiscal consolidation and rapid expansion of the Federal Reserve's balance sheet is consistent with a strategic setting in which neither authority can commit to a policy beyond its current mandate, and the fiscal authority moves before the monetary one at each date.

Date: 2018-08-30
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03815028
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Related works:
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2019)
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regime: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regimes: A Strategic Approach (2018)
Working Paper: Fiscal and Monetary Regime: A Strategic Approach (2018)
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