Macroeconomic Policy and Economic Performance [E-Book] / Pedro de Lima, Alain de Serres and Mike Kennedy
de Lima, Pedro.
de Serres, Alain. / Kennedy, Mike.
Paris : OECD Publishing, 2003
66 p. ; 21 x 29.7cm.
OECD Economics Department Working Papers ; 353
Full Text
This paper analyses the major changes in both monetary and fiscal policy that have taken place over the past two decades and, within the limits of the existing empirical research, evaluates the overall costs and benefits for the OECD economies. The general findings for monetary policy are that, while it was costly to lower inflation (in terms of output and employment), there are also benefits in terms of lower risk premiums on interest rates, a more favourable investment climate and an improvement in economic efficiency. That said, the paper concludes that there is not much of a case for lowering inflation further from its already low level. While inflation was being lowered, in a number of cases central banks were also undergoing rather significant changes to their institutional structures and policy-making frameworks. There is some limited evidence that these changes have helped in terms of better anchoring inflation expectations. At the same time there is no firm answer on how ...