TY  - JOUR
AU  - Turnovsky,Stephen J.
TI  - Monetary and Fiscal Policy Under Perfect Foresight:  A Symmetric Two Country Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1699
PY  - 1986
Y2  - September 1986
UR  - http://www.nber.org/papers/w1699
L1  - http://www.nber.org/papers/w1699.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - This paper analyzes the effects of anticipated and unanticipated domestic monetary and fiscal expansions on both the domestic and foreign economies. The analysis is based on symmetric behavior, which is not only not an unreasonable first approximation, but also offers significant analytical advantages. Specifically, it enables the dynamics of the system to be decoupled into (a) averages and (b) differences of relevant variables. Not only does this render the analysis tractable, but it also helps provide economic insight. One striking aspect is that the differences, but not the averages, respond to announcements. The consequences of this for the dynamic adjustments of the two economies to the various disturbances are discussed at length.
ER  -