Fiscal and Monetary Policy in a General Equilibrium Model

  • Truman Bewley


This is a theoretical study of monetary and fiscal policy in a general equilibrium model with rational expectations, with perfect markets for current goods, but with restrictions on borrowing and insurance and with a Clower constraint on payments. Fiscal actions are understood to be manipulations of taxes and subsidies. Monetary policy is understood to be the purchase and sale of government debt or control of the banking system’s ability to lend.


Interest Rate Monetary Policy Marginal Utility Money Supply Real Interest Rate 
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© Mukul Majumdar 1992

Authors and Affiliations

  • Truman Bewley

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