A primer on monetary and fiscal policy

Thomas Sargent

    Research output: Contribution to journalArticle

    Abstract

    Monetary policy can be constrained by fiscal policy if fiscal deficits grow large enough to require monetization of government debt. That fact implies that the administrative independence of central banks does not by itself imply that monetary policy is independent of the fiscal decisions of governments. This essay describes limitations, possibilities, and suitable goals for monetary policy within the existing pattern of institutional responsibilities. The economic limitations of what can be achieved by monetary policy are summarized in six propositions developed in the paper.

    Original languageEnglish (US)
    Pages (from-to)1463-1482
    Number of pages20
    JournalJournal of Banking and Finance
    Volume23
    Issue number10
    DOIs
    StatePublished - 1999

    Fingerprint

    Monetary and fiscal policy
    Monetary policy
    Central bank
    Economics
    Government debt
    Government
    Fiscal
    Fiscal deficit
    Fiscal policy
    Responsibility

    Keywords

    • E3
    • E4
    • E5
    • E6
    • Fiscal policy
    • Inflation
    • Monetary policy
    • Neutrality
    • Rational expectations

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

    Cite this

    A primer on monetary and fiscal policy. / Sargent, Thomas.

    In: Journal of Banking and Finance, Vol. 23, No. 10, 1999, p. 1463-1482.

    Research output: Contribution to journalArticle

    Sargent, Thomas. / A primer on monetary and fiscal policy. In: Journal of Banking and Finance. 1999 ; Vol. 23, No. 10. pp. 1463-1482.
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