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Simple Macroeconomic Policies and Welfare: a quantitative assessment

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  • Eurilton Araújo
  • Alexandre B. Cunha

Abstract

We quantitatively compare three macroeconomic policies in a cash-credit goods framework. The policies are: the optimal one; another one that fully smoothes out oscillations in output; and a simple one that prescribes constant values for tax and monetary growth rates. As often found in the related literature, the welfare gains or losses from changing from a given policy to another are small. We also show that the simple policy dominates the one that leads to constant output.

Suggested Citation

  • Eurilton Araújo & Alexandre B. Cunha, 2014. "Simple Macroeconomic Policies and Welfare: a quantitative assessment," Working Papers Series 360, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:360
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    References listed on IDEAS

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    Cited by:

    1. Cunha, Alexandre, 2013. "Optimal Exchange Rate Policy and Business Cycles," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 33(1), September.

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