Abstract
The static model. This part deals with a closed economy. The target of the central bank is zero inflation. By contrast, the target of the government is zero unemployment. An increase in money supply lowers unemployment. On the other hand, it raises inflation. Correspondingly, an increase in government purchases lowers unemployment. On the other hand, it raises inflation.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Carlberg, M. (2011). First the Central Bank Decides, then the Government Decides. In: Dynamic Policy Interactions in a Monetary Union. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-18228-0_2
Download citation
DOI: https://doi.org/10.1007/978-3-642-18228-0_2
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-18227-3
Online ISBN: 978-3-642-18228-0
eBook Packages: Business and EconomicsEconomics and Finance (R0)