Fiscal Policymaking and the Central Bank Institutional Constraint
Richard C. K. Burdekin and Leroy O. Laney
Published as: Burdekin, Richard C.K. and Leroy O. Laney (1988), "Fiscal Policymaking and the Central Bank Institutional Constraint," Kyklos 41 (4): 642-662.
Abstract: The interaction between monetary and fiscal policy is at the heart of macroeconomics, but traditional analysis often ignores the institutional aspects. In recent years a developing literature has concentrated on issues such as the influence of central bank independence on the conduct of monetary policy, and as a part of this, the extent to which the central bank accommodates government fiscal policy. Much less has been done, however, to investigate the reverse interactjon: the extent to which central bank independence influences the formation of fiscal policy. This paper concentrates pnimarily on that channel of influence, and finds some support for the case that fiscal policies are indeed affected by the independence of the central bank. Fiscal deficits, for example, may therefore be lower in countries with more independent central banks because of the greater prospect that monetary policy will not be as accommodative of those deficits.
Swiss Monetary Policy: Central Bank Independence and Stabilization Goals
Richard C.K. Burdekin
Abstract: The paper estimates a reaction function relating the rate of growth of the Swiss monetary base to a set of economic stabiilizalion objectives. Econometric results over quarterly data from 1966:2 - 1983:4 indicate the state of the federal budget, government purchases, the inflation rate and the exchange rate between the Swiss franc and the Deutsche mark to be significant explanatory variabies. The results suggest that the monetary base contracts in response to federal budget deficits and to inflation. For government purchases and the exchange rate the response is accommodative.
Structural Changes in Residential Energy Demand
Roger H. Dunstan and Ronald H. Schmidt
Published as: Dunstan, Roger H. and Ronald H. Schmidt (1988), "Structural Changes in Residential Energy Demand," Energy Economics 10 (3): 206-212.
Abstract: Residential energy consumers in the USA faced several demand shocks in the 1970s and 1980s. These included price rises engineered by the Organization of Petroleum Exporting Countries, natural gas curtailments, shortages of petroleum products and deregulation of energy markets. One result of these events has been structural change in the demand for electricity and petroleum by residential consumers. Demand functions are now more responsive to price changes and consumers react more quickly in adjusting their capital stocks to new levels.
Cross-Country Evidence on the Relationship Between Central Banks and Governments
Richard C.K. Burdekin
Published as: Burdekin, Richard C.K. (1987), "Cross-Country Evidence on the Relationship Between Central Banks and Governments," Journal of Macroeconomics 9 (3): 391-405.
Abstract: The influence of government pressure on central bank behavior is examined for Canada, France, the U.K., and West Germany. With the budget deficit proxying for this pressure, there is evidence of an overall expansionary effect of the deficit on monetary policy response to stabilization objectives. Despite there otherwise being little consistency in the reaction functions estimated across the four countries, the marked tendency is for policy to become more accommodative at higher levels of the deficit. Hence, the results point to a potentially important regularity in the relationship between central banks and governments.
Interaction Between Central Bank Behavior and Fiscal Policymaking: The Case of the U.S.
Richard C.K. Burdekin
Publised as: Burdekin, Richard C.K. (1988), "Interaction Between Central Bank Behaviour and Fiscal Policy: the U.S. Case," Applied Economics 20 (1): 97-111.
Abstract: Federal Reserve behaviour is analysed using a model which incorporates an effect an effect of iscal pressure on monetary policy formulation. Incentive structures are hypothesized to be such that the central bank plans over a longer horizan than that relevant to the administration. With the cyclically adjusted deficit proxying for fiscal pressure from the administration, the response to the deficit then plays an interactive role in affecting the trade-off weights applied to the competing goals of monetary policy. The model performs well for the USA, and provides a pattern of policy that is stable over the full 1961–83 period.
Money, Deregulation and the Business Cycle
Gerald P. O'Driscoll, Jr.
Published as: O'Driscoll Jr., Gerald P. (1986), "Money, Deregulation and the Business Cycle," Cato Journal 6 (2): 587-616.