Monetary and fiscal policy interaction and government debt stabilization

In many developing and developed countries, government debt stabilization is an important policy issue. This paper models the strategic interaction between the monetary authorities who control monetization and the fiscal authorities who control primary fiscal deficits. Government debt dynamics are driven by the interest payments on outstanding debt and the part of the primary fiscal deficits that is not monetized. Modelling the interaction as a differential game, we compare the cooperative equilibrium and the non-cooperative Nash open-loop equilibrium. The well-known unpleasant monetarist arithmetic is reinterpreted in this differential game framework. We consider also the effects of making the Central Bank more independent.Game Theory;Central Banks;Monetary Policy;National Debt;Fiscal Policy;monetary economics

Money, Fiscal Defecits and Government Debt in a Monetary Union

The replacement of national currencies by a common currency in the EMU causes a monetary externality if the European Central Bank is inclined to monetize part of outstanding government debt in the community.High government debt in one part of the EU then increases the common inflation rate.We model debt stabilization in the EU as a differential game between fiscal authorities and the ECB.Three different equilibria are considered: the Nash open-loop equilibrium, the Stackelberg open-loop equilibrium with the ECB leading and the Stackelberg open-loop equilibrium with the fiscal authorities leading.Dynamics of the fiscal deficits, inflation and government debt in a monetary union are derived and compared with an EU with national monetary policies

Metamorphic conditions in the Nilgiri Granulite Terrane and the adjacent Moyar and Bhavani Shear Zones: A reevaluation

Data were presented on pressure and temperature determinations from the Nilgiri Hills. About 70 samples were analyzed by probe and several calibrations of garnet-pyroxene thermometry and barometry applied. Most calibrations gave considerable scatter; however, a new calibration by Bhattacharya, Raith, Lal, and others, accounting for nonideality in both garnet and orthopyroxene, gave consistent results of 754 + or - 52 C and 9.2 + or - 0.7 kbar. On the regional scale, a pressure increase of 6.5 to 7 kbar in the SW to 11 kbar in the NE was related to block tilting. A continuous pressure gradient into the Moyar shear zone suggests that the zone is not a suture juxtaposing unrelated blocks

Gneiss-charnockite transformation at Kottavattam, Southern Kerala (India)

At Kottavattam, leucocratic granitic garnet-biotite gneisses (age less than 2 Ga) were partially transformed to coarse-grained charnockite along a system of conjugate fractures (N70E and N20W) and the foliation planes (N60 to 80W; dip 80 to 90 SW) about 550 m.y. ago. To examine and quantify changes in fabric, mineralogy, pore fluids and chemical composition associated with this process, large rock specimens showing gneiss-charnockite transition were studied in detail. The results of the present study corroborate the concept that charnockite formation at Kottavattam is an internally-generated phenomenon and was not triggered by the influx of carbonic fluids from a deep-seated source. It is suggested that charnockitization was caused by the following mechanism: (1) near-isothermal decompression during uplift of the gneiss complex led to an increase of the pore fluid pressure (P sub fluid greater than P sub lith) which - in a regime of anisotropic stress - triggered or at least promoted the development of conjugate fractures; (2) the simultaneous release of pore fluids from bursting fluid inclusions and their escape into the developing fracture system resulted in a drop of fluid pressure; and (3) the internal generation and buffering of the fluids and their, probably, limited migration in an entirely granitic rock system explains the absence of any significant metasomatic mass transfer

A Model of Vertical Oligopolistic Competition

This paper develops a model of successive oligopolies with endogenous market entry, allowing for varying degrees of product differentiation and entry costs in both markets. Our analysis shows that the downstream conditions dominate the overall profitability of the two-tier structure while the upstream conditions mainly affect the distribution of profits. We compare the welfare effects of upstream versus downstream deregulation policies and show that the impact of deregulation may be overvalued when ignoring feedback effects from the other market. Furthermore, we analyze how different forms of vertical restraints influence the endogenous market structure and show when they are welfare enhancing