The Central Bank Strikes Back! Credibility of Monetary Policy under Fiscal Influence

• 成果类型: Article
• 署名作者: Camous, Antoine; Matveev, Dmitry
• 署名单位: University of Mannheim; Bank of Canada
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueac055
• 发表日期: 2022
• 页码: 1-29
• 关键词: Capital taxation; COMMITMENT; DISCRETION; rules; MODEL; debt

摘要

How should independent central banks react if pressured by fiscal policymakers? We contrast the implications of two monetary frameworks: one, where the central bank follows a standard rule aiming exclusively at price stability against the other, where monetary policy additionally leans against fiscal influence. The latter rule improves economic outcomes by providing appropriate incentives to the fiscal authority. More importantly, the additional fiscal conditionality can enhance the credibility of the central bank to achieve price stability. We emphasise how the level and structure of government debt emerge as key factors affecting the credibility of monetary policy with fiscal conditionality.