Fiscal and Monetary Policy in a Basic Endogenous Growth Model

Greiner A (2014)
Computational Economics 45(2): 285-301.

Journal Article | Published | English

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Abstract
We present a monetary endogenous growth model and analyse the effects of fiscal and monetary policy with real money as an argument in the utility function. We show that a balanced government budget gives a higher balanced growth rate and lower inflation than a situation with permanent public deficits. It also leads to higher welfare compared to a situation with permanent deficits when the government does not put a high weight on stabilizing debt. However, when governments run deficits with a high weight on stabilizing debt, comparative welfare effects depend on the initial conditions with respect to public debt. Further, for a given monetary policy a stricter debt policy yields higher growth, lower inflation and higher welfare. A rise in the nominal money supply can compensate the negative growth effects of a loose debt policy up to a certain point but only at the cost of higher inflation and lower welfare.
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Greiner A. Fiscal and Monetary Policy in a Basic Endogenous Growth Model. Computational Economics. 2014;45(2):285-301.
Greiner, A. (2014). Fiscal and Monetary Policy in a Basic Endogenous Growth Model. Computational Economics, 45(2), 285-301.
Greiner, A. (2014). Fiscal and Monetary Policy in a Basic Endogenous Growth Model. Computational Economics 45, 285-301.
Greiner, A., 2014. Fiscal and Monetary Policy in a Basic Endogenous Growth Model. Computational Economics, 45(2), p 285-301.
A. Greiner, “Fiscal and Monetary Policy in a Basic Endogenous Growth Model”, Computational Economics, vol. 45, 2014, pp. 285-301.
Greiner, A.: Fiscal and Monetary Policy in a Basic Endogenous Growth Model. Computational Economics. 45, 285-301 (2014).
Greiner, Alfred. “Fiscal and Monetary Policy in a Basic Endogenous Growth Model”. Computational Economics 45.2 (2014): 285-301.
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