Aspects Of Optimal Monetary And Fiscal Policies

This article looks at a detailed approach to optimal government policies, given the implications for monetary policy and fiscal policy. The analysis has three distinct stages. In the first phase of analysis / modeling, we abstain from physical capital, in which case the economy tends towards a steady state, and optimal government policy can be analyzed in static (pure) state. In the second phase, we introduce the capital (variable) notion, thus reintroducing the dynamics into the analysis model. Finally, we will look at some aspects of the timeliness of optimal policies and the continuity of governmental policy (monetary and fiscal) decisions.