Journal of Economics

, Volume 56, Issue 3, pp 247–266 | Cite as

Time inconsistency problems and commitments of monetary and fiscal policies

  • Henrik Jensen
Article

Abstract

Within a policy game, where monetary and fiscal authorities are subject to a time inconsistency problem vis-à-vis a monopoly-union, we provide additional support for commitments of either authority: monetary commitment moderates fiscal time inconsistency problems, and fiscal commitment moderates monetary time inconsistency problems. In contrast with the benefits of commitments, a regime of coordinated monetary and fiscal policy may turn out to be counterproductive.

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Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • Henrik Jensen
    • 1
  1. 1.Institute of EconomicsUniversity of AarhusAarhus CDenmark

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