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Monetary policy with declining deficits: theory and an application to recent Argentine monetary policy

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dc.contributor.author Manuelli, Rody
dc.contributor.author Vizcaino, Juan I.
dc.date.accessioned 2017-09-20T15:55:49Z
dc.date.available 2017-09-20T15:55:49Z
dc.date.issued 2017-05
dc.identifier.uri http://hdl.handle.net/10230/32774
dc.description.abstract We study the nature of the optimal monetary policy in a regime of “fiscal dominance” when the monetary authority -that can print money or issue interest earning debt- is required to finance an exogenous sequence of transfers to the Treasury. We show that the degree of commitment on the part of the monetary authority has a significant impact on the details of the optimal policy. We apply this model to the recent experience of Argentina and we find that the inflation rate experienced by Argentina during the first year of the monetary program is close to the predictions of the weakly time consistent solution. Moreover, consistent with both versions of the model, the Argentine central bank has increased the ratio of interest earning debt to monetary base.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;66
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights.uri https://creativecommons.org/licenses/by/4.0/
dc.subject.other Money
dc.subject.other Monetary policy
dc.title Monetary policy with declining deficits: theory and an application to recent Argentine monetary policy
dc.type info:eu-repo/semantics/workingPaper
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess

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