Abstract
By using optimal control methods, it is possible to identify the best inflation-output combinations which are compatible with a given empirical model. In general, these tradeoffs are calculated on the assumption that optimal policy decisions are centralised; i.e. that the political institutions concerned with planning act in complete agreement. However, this is not the case in many countries where two decision making institutions, the government and the central bank, can co-exist, and manage fiscal and monetary policy separately.
Financial help from the Italian Ministry of Education is gratefully acknowledged.
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© 1989 Springer-Verlag Berlin Heidelberg
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Hallett, A.H., Petit, M.L. (1989). A Note on the Costs of Uncoordinated Fiscal and Monetary Policies. In: Pressmar, D., Jäger, K.E., Krallmann, H., Schellhaas, H., Streitferdt, L. (eds) Operations Research Proceedings 1988. Operations Research Proceedings, vol 1988. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-74862-2_79
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DOI: https://doi.org/10.1007/978-3-642-74862-2_79
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