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Jurnal Ekonomi Malaysia

52 (2) 2018 95 – 108

Monetary and Fiscal Regimes Policy Rules in a Discrete Time Model
Peraturan Dasar Rejim Monetari dan Fiskal dalam Model Masa Diskret

Fakulti Ekonomi dan Pengurusan
Universiti Kebangsaan Malaysia
43600 UKM Bangi Selangor
MALAYSIA

nrlin@ukm.edu.my

Abstract

This paper determines how fiscal policy rule interacts with monetary policy rule affect the conditions of equilibrium determinacy when moving from continuous to discrete time. The monetary authority follows an interest rate-targeting rule while the fiscal authority follows a debt-targeting rule. It is shown that the local determinacy of an equilibrium path is determinate under the active monetary/passive fiscal regime, while the examination of other regimes is shown to be indeterminate. These findings are in stark contrast with the case of the continuous time model, suggesting that the timing assumptions play an important role in determining local equilibrium.

Keywords

equilibrium indeterminacy; Fiscal policy; monetary policy

Author’s Acknowledgement

We would like to thank Universiti Kebangsaan Malaysia (UKM) for funding this research via Geran Galakan Penyelidik Muda (GGPM-2013-005) research grant.

http://dx.doi.org/10.17576/JEM-2018-5202-8
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Khalid, (2018). Monetary and Fiscal Regimes Policy Rules in a Discrete Time Model. Jurnal Ekonomi Malaysia, 52(2), 95–108. http://dx.doi.org/10.17576/JEM-2018-5202-8

@article{khalid2018monetary,
  title={Monetary and Fiscal Regimes Policy Rules in a Discrete Time Model},
  author={Khalid, Norlin},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={2},
  pages={95—108},
 

year={2018},
}

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