Myopic fiscal objectives and long-Run monetary efficiency

• 成果类型: Article
• 署名作者: Gaballo, Gaetano; Mengus, Eric
• 署名单位: Hautes Etudes Commerciales (HEC) Paris; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2023.03.002
• 发表日期: 2023
• 页码: 1-17
• 关键词: fiat money; Price level determination; Fiscal-monetary interactions; INEQUALITY; redistribution; Hetero eneous agents; incomplete markets

摘要

Is the pursuit of myopic fiscal objectives, such as short-run redistribution or public spending, a threat to long-run monetary efficiency? We answer this question in the context of a textbook overlapping generations model where we introduce a sequence of one-period fiscal authorities that can tax endowments and trade money. Each authority is myopic in that it cares only about current agents' utility and its own consumption, without any concern about the future. Nonetheless, we show that the sequence of fiscally-backed money purchases that maximize the current authority's objective also selects a unique equilibrium - one in which money is traded at the efficient intertemporal price - as a by-product. In fact, myopic redistribution policies ensure equality in marginal utilities making up for incomplete markets, without interfering with the efficiency of private intertemporal choices. Multiplicity and sub-optimality emerge as fiscal capacity is bounded, inducing authorities to use money trades to generate resources for public consumption. (c) 2023 Elsevier B.V. All rights reserved.