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Frontiers of Economics in China

Front Econ Chin    2012, Vol. 7 Issue (2) : 263-285     DOI: 10.3868/s060-001-012-0012-3
research-article |
Money Quantity and Optimal Monetary and Fiscal Policy: A Quantitative Analysis
Xuan Liu()
Department of Economics, East Carolina University, Greenville, NC 27858, USA
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Abstract

This paper quantitatively analyzes the impact of money stock on optimal monetary and fiscal policy in a stochastic production economy with sticky prices. The numerical results indicate that a sufficient large quantity of money makes a noticeable difference in many aspects of optimal monetary and fiscal policy. They suggest that the volatile inflation in China may not be as bad as the existing theory would have implied if its large amount of money is taken into consideration.

Keywords optimal fiscal and monetary policy      money stock      sticky prices     
Corresponding Authors: Xuan Liu,Email:liux@ecu.edu   
Issue Date: 05 June 2012
 Cite this article:   
Xuan Liu. Money Quantity and Optimal Monetary and Fiscal Policy: A Quantitative Analysis[J]. Front Econ Chin, 2012, 7(2): 263-285.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-001-012-0012-3
http://journal.hep.com.cn/fec/EN/Y2012/V7/I2/263
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