University of Nottingham Ningbo China
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GEP: Optimal Monetary and Fiscal Policy in an Economy with Capital Accumulation and Inflation Persistence

22 October 2014 (14:30-16:00)

The School of Economics and The Nottingham Centre forResearch on Globalisation and Economic Policy (GEP) China are pleased to inviteyou to the following research seminar given by Dr. Paul Luk from Hong KongMonetary Authority:

About the seminar

This paper studies the coordination of fiscal andmonetary policies under optimal commitment and discretion policies under a NewKeynesian framework. The paper shows that when there is indexation inprice-setting and the indexation rule depends on lagged output gap as inSteinsson (2003), under the optimal commitment policy, both fiscal and monetarypolicies have active roles in inflation stabilisation, even although debtfollows a unit-root process. Under the optimal discretion policy, both fiscaland monetary policies have active roles in inflation stabilisation to drive debtback to the pre-shock level, consistent with Leith and Wren-Lewis (2013).Extending the model to include capital accumulation does not alter the mainresults of the paper.

About the speaker

Dr. Paul Luk is currently an Economist/Manager in HongKong Monetary Authority. He earned his PhD and Masters Degrees at theUniversity of Oxford in economics. His current research interests includeMacroeconomics, International Economics, and the Chinese Economy.