This paper extends a well-known macroeconomic stabilisation game between monetary and fiscal authorities developed by Dixit
and Lambertini to multiplicative (policy) uncertainty. We find that even if fiscal and monetary authorities share a common
output and inflation target (i.e., the symbiosis assumption), the achievement of the common targets is no longer guaranteed;
under multiplicative uncertainty, in fact, a time consistency problem arises unless policymakers' output target is equal to
the natural level.
Forschungsbereich:Makroökonomie und öffentliche Finanzen