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dc.contributor.advisorNolan, Charles
dc.contributor.authorHorvath, Michal
dc.description.abstractThis thesis aims to contribute towards a better understanding of the optimal coordination of monetary and fiscal policy in complex economic environments. We analyze the characteristics of optimal dynamics in an economy in which neither prices nor wages adjust instantaneously and lump-sum taxes are unavailable as a source of government finance. We then propose that monetary and fiscal policy should be coordinated to satisfy a pair of simple `specific targeting rules', a rule for inflation and a rule for the growth of real wages. We show that such simple rule-based conduct of policy can do remarkably well in replicating the dynamics of the economy under optimal policy following a given shock. We study optimal policy coordination in the context of an economy where a constant proportion of agents lacks access to the asset market. We find that the optimal economy moves along an analogue of a conventional inflation-output variance frontier in response to a government spending shock, as the population share of non-Ricardian agents rises. The optimal output response rises, while inflation volatility subsides. There is little evidence that increased government spending would crowd in private consumption in the optimal economy. We investigate the optimal properties and wider implications of a macroeconomic policy framework aimed at meeting an unconditional debt target. We show that the best stationary policy in terms of an unconditional welfare measure is characterized by highly persistent debt dynamics, less history-dependence in the conduct of policy, less reliance on debt finance and more short-term volatility following a government spending shock compared with the non-stationary `timelessly optimal' plan.en
dc.format.extent1615970 bytes
dc.publisherUniversity of St Andrews
dc.subjectOptimal monetary and fiscal policyen
dc.subjectTimeless perspectiveen
dc.subjectNominal rigidityen
dc.subjectNon-Ricardian agentsen
dc.subjectStationary policyen
dc.subjectUnconditional debt targetsen
dc.subject.lcshMonetary policy--Econometric modelsen
dc.subject.lcshFiscal policy--Econometric modelsen
dc.subject.lcshMathematical optimizationen
dc.titleOptimal monetary and fiscal policy in economies with multiple distortionsen
dc.type.qualificationnamePhD Doctor of Philosophyen
dc.publisher.institutionThe University of St Andrewsen

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