Why is conventional monetary policy supplemented by expansionary fiscal policy in the face of large recessionary output
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Why is conventional monetary policy supplemented by expansionary fiscal policy in the face of large recessionary output gaps? In normal times, should monetary and fiscal policies be coordinated or separated? In Nordhaus’s model of policy coordination, if the fiscal authority’s desired level of deficit is reduced due to concerns about high debt levels, how would the resulting equilibria be different from otherwise? Explain.
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