In this seminar David Vines will provide an overview of his recent paper, ‘The Optimal Coordination of Fiscal and Monetary Policy in a New Keynesian Framework’. This paper studies the coordination of monetary and fiscal policy in a simple New Keynesian model. The author shows that, in such a setup and when the policymaker acts with commitment, it is optimal not to use fiscal policy to stabilise inflation. The author illustrates this result using additively separable preferences and Greenwood-Hercowitz-Huffman (1988) preferences, and he discusses the intuition behind this result.

David Vines is a Professor of Economics, and a Fellow of Balliol College, at Oxford University, where he is also Acting Director of the Political Economy of Financial Markets Programme at St Anthony’s College and Director of the Ethics and Economics Programme at the Institute for New Economic Thinking in the Oxford Martin School. In addition he is a Research Fellow of the Centre for Economic Policy Research in London and CAMA Director in the Globalisation and Trade program.

David’s research is on macroeconomics, finance, and global economic governance; he has published many papers and books on these subjects. His initial work was with the Nobel-Prize winner James Meade in Cambridge; together they published some of the earliest research on inflation-targeting regimes. He is currently working on the restoration of trust in the financial system, on the future of the European Monetary Union, and on the role of the International Monetary Fund in ensuring international macroeconomic cooperation. He teaches macroeconomics, international economics and development economics to both graduate students and undergraduates at Oxford University.

Last year David published Capital Failure: Restoring Trust in Financial Services (OUP, 2014), which he edited with Nick Morris. Peter Temin and he have recently written The Leaderless Economy (Princeton University Press, 2013) and Keynes: Useful Economics for the World Economy (MIT Press, 2014).

The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.