Journal of Applied Economic Research
ISSN 2712-7435
The Analysis Steady to Not Structural Uncertainty Monetary and Fiscal Policy at Their Cooperation Interaction
Serkov L.A.
Abstract
Abstract. The search for a fiscal and monetary policy that is robust to uncertainty and does not lead to negative consequences for any possible distortion specifications of the economic model, is particularly relevant to the development of dynamic models. It is of scientific and practical interest to study the effect of the degree of the dominance of monetary and fiscal authorities over each other on policy stability. In this article, a neo-Keynesian model is used as a case to study the effect of the degree of cooperation between the Сentral Bank and the government on policy stability. Analysis is performed of robustness to non-structural uncertainties of fiscal and monetary policies with cooperative interaction between the monetary and fiscal authorities for the regime with the obligations and discretionary policy regime. Recommendations are offered for the development of robustness of non-structural policy uncertainties. Economic-mathematical methods and computer simulation methods were used in the study of sustainability issues to the uncertainties of fiscal and monetary policy. It was found that the coordinated interaction of fiscal and monetary authorities to the regime with obligations and discretionary mode is effective only in the case of a greater negotiating power of the Сentral Bank. This is true for the model with the worst-case scenario, and for models resistant to policy uncertainty. For the regime with obligations, the growing degree dominance of the government leads to distortions in the main response of government spending on inflation shock. With an increasing degree of government dominance in cooperation with the Central Bank under a discretionary policy the role of the distortions introduced by the standard model is reduced. In the case of a policy with commitments and under a discretionary policy the distortions brought to the standard model at a shock of demand, are minimal. It is concluded that that the analysis of monetary and fiscal policy in the macroeconomic dynamic models should take into account the obtained results outlined in this paper when developing a policy that is resistant to non-structural uncertainties.
Keywords
Key words: robustness; fiscal and monetary policies; non-structural uncertainty.
About Authors
Serkov Leonid Aleksandrovich – Candidate of Physic and Mathematic Sciences, Senior Researcher, Institute of Economics, The Ural Branch of Russian Academy of Sciences, Ekaterinburg, Russia (620014, Ekaterinburg, Moskovskaya street, 29); e-mail: dsge2012@mail.ru.
DOI: http://dx.doi.org/10.15826/vestnik.2017.16.2.013
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