期刊名称：Departmental Discussion Papers / University of Glasgow, Department of Economics
出版年度：2010
卷号：1
出版社：University of Glasgow, Department of Economics
摘要：This paper examines the interactions between multiple national .scal policy-
makers and a single monetary policy maker in response to shocks to govern-
ment debt in some or all of the countries of a monetary union. We assume that
national governments respond to excess debt in an optimal manner, but that
they do not have access to a commitment technology. This implies that national
.scal policy gradually reduces debt: the lack of a commitment technology pre-
cludes a random walk in steady state debt, but the need to maintain national
competitiveness avoids excessively rapid debt reduction. If the central bank can
commit, it adjusts its policies only slightly in response to higher debt, allowing
national .scal policy to undertake most of the adjustment. However if it cannot
commit, then optimal monetary policy involves using interest rates to rapidly
reduce debt, with signi.cant welfare costs. We show that in these circumstances
the central bank would do better to ignore national .scal policies in formulating
its policy.
