Journal articles: 'Monetary and Fiscal Policy'

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Yunanto, Muhamad, and Henny Medyawati. "Fiscal Policy and Monetary Policy: Sensitivity Analysis." International Journal of Trade, Economics and Finance 6, no. 2 (April 2015): 79–84. http://dx.doi.org/10.7763/ijtef.2015.v6.447.

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Mochtar, Firman. "Fiscal and Monetary Policy Interaction : Evidences and Implication for Inflation Targeting in Indonesia." Buletin Ekonomi Moneter dan Perbankan 7, no. 3 (May 20, 2005): 359–86. http://dx.doi.org/10.21098/bemp.v7i3.114.

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Paper ini menganalisa interaksi kebijakan fiskal dan moneter di Indonesia pada masa sebelum dan sesudah krisis, dengan melakukan estimasi atas quasy fiscal activity (QFA) Bank Indonesia dan mengurai interaksi antara kebijakan fiskal dan moneter. Penulis menemukan bahwa selama masa krisis, aktifitas ini (QFA) ada dan dilakukan oleh bank sentral Indonesia. Hal ini berbeda dengan masa sebelum krisis dimana QFA memiliki besaran yang netral. Dalam kaitan interaksi kebijakan fiskalmoneter, fakta ini menunjukkan dominasi kebijakan fiskal pada masa setelah krisis. Analisa interaksi antara kebijakan fiskal dan moneter ini membawa implikasi kebijakan di Indonesia yakni perlunya disiplin dalam kebijakan fiskal dan perlunya komitmen untuk mempertahankan sustainability kebijakan tersebut. Kegagalan mencapai kebijakan fiskal yang optimal akan mengurangi efektifitas kebijakan moneter dalam rangka mengontrol inflasi meski dalam kerangka inflation targeting yang secara parsial sudah diimplementasikan oleh Bank Indonesia.Keyword: Quasi Fiscal Activities, Fiscal Policy, Monetary Policy, Inflation TargetingJEL: E11, E31, E52, E62

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Eromosele, Harrison Ogbeide, and David Umoru. "DO FISCAL AND MONETARY POLICIES COOPERATE OR CONFLICT WITH EACH OTHER IN NIGERIAN ECONOMY?" SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 3, no. 1 (March 26, 2019): 15. http://dx.doi.org/10.29259/sijdeb.v3i1.15-30.

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The determination for this study was to ascertain if fiscal and monetary policies are cooperating or rather conflicting with each other in Nigerian economy. Government disbursement and growth of money stock were used to denote fiscal and monetary policy variables. Two reduced form equations of monetary and fiscal policies were specified from underlying structural model. This yielded fourteen RF parameters in contrast to eleven structural parameters and so we had system of over-identification. These prompted use of IV estimators such as GMM and 3SLS. Estimates show similar findings for both estimators as we found evidence that fiscal policy does not respond favourably to monetary policy as monetary policy was found to have an insignificant effect on the fiscal policy. More so, fiscal policy does not respond to lag effect of monetary policy. Relatively, monetary policy responds favourably to fiscal policy. The lag effect of money supply was also found to have a significant impact on money supply. Empirical finding so upholds that Nigerian economy is fiscally overriding notwithstanding money being an integral part of all macroeconomic variables. Significance of lag effects of both fiscal and monetary policy is reflection that implementation process of both policies is excessively time overshadowing. Consequently, there is need for building well-organized units of fiscal and monetary authorities that can accelerate implementation process of these policies.

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Jevđović, Gordana, and Ivan Milenković. "MONETARY VERSUS FISCAL DOMINANCE IN EMERGING EUROPEAN ECONOMIES." Facta Universitatis, Series: Economics and Organization, no. 1 (September 26, 2018): 125. http://dx.doi.org/10.22190/fueo1802125j.

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The conventional macroeconomic paradigm is that monetary policy provides the nominal anchor for inflation expectations and that fiscal policy is disciplined in implementing credible and timely revenue-expenditure measures when debt rises, in order to ensure sustainability. In this scenario monetary policy is active, whereas fiscal policy is passive, which is referred to as monetary dominance. However, the proponents of the Fiscal Theory of the Price Level emphasize that another regime may be possible - the one of fiscal dominance. In this setup, primary balance follows some arbitrary path, not necessary compatible with the evolution of government debt, and monetary policy is faced with limited room for manoeuvre as it has no option but to adjust to fiscal developments. Following these theoretical foundations, the aim of this paper is to empirically ascertain the prevailing policy regime (monetary versus fiscal dominance) in five emerging European economies (Hungary, Romania, Bulgaria, Serbia and Macedonia). In line with expectations, results overwhelmingly suggest that monetary policy may have been subordinated to fiscal policy over the period of analysis in all economies under scrutiny and that fiscally-led regime prevailed.

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McMillin, W. Douglas, and Douglas Fisher. "Monetary and Fiscal Policy." Southern Economic Journal 55, no. 4 (April 1989): 1071. http://dx.doi.org/10.2307/1059500.

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Davig, Troy, and Eric M. Leeper. "Monetary–fiscal policy interactions and fiscal stimulus." European Economic Review 55, no. 2 (February 2011): 211–27. http://dx.doi.org/10.1016/j.euroecorev.2010.04.004.

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BRANCH, WILLIAM A., TROY DAVIG, and BRUCE McGOUGH. "Monetary–Fiscal Policy Interactions under Implementable Monetary Policy Rules." Journal of Money, Credit and Banking 40, no. 5 (August 2008): 1095–102. http://dx.doi.org/10.1111/j.1538-4616.2008.00149.x.

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Otsubo, Kansho Piotr. "The Effects of Fiscal and Monetary Policies in Japan: What Combination of Policies Should Be Used?" Journal of International Commerce, Economics and Policy 09, no. 01n02 (February 2018): 1850004. http://dx.doi.org/10.1142/s1793993318500047.

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In this paper, we compare and analyze the differences in the effects of fiscal and monetary policy using time-varying parameter structural vector auto-regression (TVP-VAR). Specifically, we estimate a 5-variable TVP-VAR model using monthly data from March 2001 to August 2017. The estimation results indicated the following four points. First, expansionary fiscal policy can impact GDP faster than an expansionary monetary policy. Second, expansionary fiscal policy has lowered prices. Third, an expansionary monetary policy can increase GDP more persistently than an expansionary fiscal policy during unconventional monetary policy periods. Finally, expansionary monetary policy has raised prices. These estimation results reveal that if the Japanese government wants to strongly boost GDP alone, it should use fiscal policy alongside monetary policy because fiscal policy can immediately raise GDP. If the Japanese government seeks moderate increases in both GDP and prices, it is more effective to use monetary policy alone without increasing fiscal expenditure.

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Adam, Klaus, and Roberto M. Billi. "Monetary conservatism and fiscal policy." Journal of Monetary Economics 55, no. 8 (November 2008): 1376–88. http://dx.doi.org/10.1016/j.jmoneco.2008.09.003.

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CHUNG, HESS, TROY DAVIG, and ERIC M. LEEPER. "Monetary and Fiscal Policy Switching." Journal of Money, Credit and Banking 39, no. 4 (June 2007): 809–42. http://dx.doi.org/10.1111/j.1538-4616.2007.00047.x.

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11

Arestis, Philip. "Fiscal policy is still an effective instrument of macroeconomic policy." Panoeconomicus 58, no. 2 (2011): 143–56. http://dx.doi.org/10.2298/pan1102143a.

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Recent developments in macroeconomics and macroeconomic policy, what has come to be known as ?New Consensus in Macroeconomics?, downgrades the role of fiscal policy and upgrades that of monetary policy. This contribution aims to consider this particular contention by focusing on fiscal policy. We consider fiscal policy within the current ?new consensus? theoretical framework, which views fiscal policy as ineffective, and argue that it deserves a great deal more attention paid to it than it has been recently. We review and appraise recent and not so recent theoretical and empirical developments on the fiscal policy front. The possibility of fiscal and monetary policy coordination is proposed and discussed to conclude that it deserves a great deal more attention and careful consideration than it has been given to in the past. Our overall conclusion is that discretionary application of fiscal and monetary policy in a coordinated and focused manner as a tool of macroeconomic policy deserves serious attention paid to it than hitherto.

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Al-Hawri, Prof Dr Mohammed Ahmed. "Measuring the Relative Importance of Fiscal and Monetary Policy in Stimulating Economic Growth in Yemen: An Econometrics Study Using Co-integration Approach." Journal of Social Studies 25, no. 4 (December 30, 2019): 1–28. http://dx.doi.org/10.20428/jss.v25i4.1586.

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The study attempted to analyze and evaluate the performance of monetary and fiscal policy for the period 2000-2014 and its effectiveness in increasing economic growth using the descriptive analytical and econometrics approach. The study also attempted to measure the relative importance of fiscal and monetary policies and their relationship to economic growth using the co-integration method and the error correction model, which allows measuring the relative importance of fiscal and monetary policy and its relation to economic activity. Analysis of fiscal and monetary indicators showed that there were imbalances and distortions in financial and monetary performance that contributed to the weak effectiveness of fiscal and monetary policy in achieving economic stability and stimulating economic growth. Keywords: co-integration method, fiscal policy, monetary policy, economic growth, error correction model.

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Chugunov, Igor, Mykola Pasichnyi, Valeriy Koroviy, Tetiana Kaneva, and Andriy Nikitishin. "Fiscal and Monetary Policy of Economic Development." European Journal of Sustainable Development 10, no. 1 (February 1, 2021): 42. http://dx.doi.org/10.14207/ejsd.2021.v10n1p42.

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Fiscal and monetary policy coordination should focus on increasing public welfare and maintaining long-term macroeconomic stability. This article aims to enhance the theoretical and methodological basis of fiscal and monetary policy formation and determine the priority areas for improving their coordination to ensure sustainable economic development. We developed an institutional approach to study the fiscal-monetary mix. It is advisable to create favorable monetary conditions for fiscal measures and form a balanced budget for monetary regulation. The authors proposed the structural-functional model that highlights both fiscal and monetary policies’ impact on aggregate demand. The results showed no positive effects of general government expenditures on the GDP per capita growth in 19 emerging economies from 1995 to 2018. The influence of public spending on economic growth depends on institutions’ quality, the composition of expenditures, and fiscal architecture. The expediency of increasing the share of productive expenditures that positively affect stimulating the economy is substantiated. In the long-run, monetary policy should ensure a comprehensive combination of inflation targeting conditions, the adaptive use of tools to achieve intermediate and final targets.

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Shapran, Vitaliy. "Monetary incentives and fiscal policy mutual influence." VUZF Review 6, no. 4 (December 27, 2021): 180–86. http://dx.doi.org/10.38188/2534-9228.21.4.21.

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The article considers the problems and practice of using the tools of monetary and fiscal stimulation of the economy. The main problems of the application of monetary instruments in practice in emerging markets are identified. The author paid special attention to the definition of classical monetary policy instruments and their role in economic growth in emerging markets. Critical assessment of the role of monetary policy instruments in stimulating economic growth is based on the practice of central banks in emerging markets. Recommendations for the analysis of the efficiency of monetary transmission are given. Problems of efficiency of application of fiscal stimulus instruments in emerging markets are raised. The mechanisms of the dependence between fiscal and monetary policies and the strengthening of such dependence in the case of a significant informal sector of the economy and an underdeveloped financial market are demonstrated. The author not only points out the need for coordination in choosing between monetary and fiscal policy but also advocates the idea of having an independent arbitrator between monetary and fiscal authorities in developing countries. The article also focuses on the analyzing algorithm of the use of monetary policy instruments for economic growth effectiveness. The conclusions made in the article will be especially useful for those who are interested in the issue of optimal choice between monetary and fiscal instruments to stimulate economic development in emerging markets.

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Abbas, Kalbe, and Tariq Mahmood. "Fiscal Effects of Monetary Seigniorage: A Case Study of Pakistan." Pakistan Development Review 33, no. 4II (December 1, 1994): 1113–19. http://dx.doi.org/10.30541/v33i4iipp.1113-1119.

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The effects of monetary policy on key macro variables have been studied in the literature. In Pakistan most of these studies concentrate on exploring the interdependence of money supply, national income, inflation etc.1 One important, but neglected issue of monetary policy, is its fiscal effects. The fiscal and monetary authorities being parts of the total economic policy machinery, the role of monetary instruments in achieving fiscal objective should not be ignored. In countries like Pakistan where the central bank is under direct control of the government, fiscal policy is often made under the assumption that the monetary policy will be adjusted accordingly.2 There are a number of ways in which monetary policy may lead to fulfilment of some fiscal objectives. These include devaluation, change in interest rate and change in monetary base.

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Sutawijaya, Adrian, and Etty Puji Lestari. "PENERAPAN METODE VECTOR AUTO REGRESSION DALAM INTERAKSI KEBIJAKAN FISKAL DAN MONETER DI INDONESIA." Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan 14, no. 1 (June 1, 2013): 66. http://dx.doi.org/10.23917/jep.v14i1.151.

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The purpose of this study is to analyze the interaction of fiscal and monetary policy in Indonesia, especially after the introduction of fiscal and monetary policy shocks. The research method used is the vector autoregression (VAR). VAR is usually used for projecting coherent system variables and time to analyze the dynamic impact of disturbance factors contained in the system variables. Variables used in this study is the level of interest rates as a proxy for monetary policy instruments, government expenditures as a proxy for fiscal policy, inflation rates and national income. The results show that fiscal policy is a negative shock to inflation and responded with a tight monetary policy, while the shock in monetary policy will reduce national income. The application of fiscal and monetary policies that will effectively promote economic growth.

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Di Bartolomeo, Giovanni, and Francesco Giuli. "Fiscal and monetary interaction under monetary policy uncertainty." European Journal of Political Economy 27, no. 2 (June 2011): 369–75. http://dx.doi.org/10.1016/j.ejpoleco.2010.11.001.

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Yuniwinsah, Fadhliah, and Ali Anis. "ANALISIS KAUSALITAS KEBIJAKAN FISKAL EKSPANSIF, KEBIJAKAN MONETER EKSPANSIF DAN PERTUMBUHAN EKONOMI DI INDONESIA." Jurnal Kajian Ekonomi dan Pembangunan 2, no. 1 (July 10, 2020): 55. http://dx.doi.org/10.24036/jkep.v2i1.8855.

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This study examined the causality between expansionary fiscal policy, expansionary monetary policy and economic growth in Indonesia’s using a time series data with vector autoregression model (VAR) in the period of 1969-2018. The results of this study showed that are there is no causality between expansionary fiscal policy and expansionary monetary policy but there one-way relationship between them, it is the expansionary monetary policy gives influence to expansionary fiscal policy. There is no causality between expansionary fiscal policy and economic growth but there one-way relationship between them, It is economic growth gives influence to expansionary fiscal policy. And there is no causality between expansionary monetary policy and economic growth but there one-way relationship between them, it is economic growth gives influence to expansionary monetary policy.

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Haltom, Renee, and John Weinberg. "Unsustainable Fiscal Policy: Implications for Monetary Policy." Economic Quarterly 101, no. 02 (February 2, 2016): 151–67. http://dx.doi.org/10.21144/eq1010204.

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ZIA UR REHMAN, ASAD KHAN, SHER ALI KHAN, and SHAH RAZA KHAN. "Monetary Policy, Fiscal Policy and Capital Structure." Journal of Business & Tourism 4, no. 2 (November 7, 2021): 77–85. http://dx.doi.org/10.34260/jbt.v4i2.163.

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Instruments of monetary and fiscal policy are beyond the control of the management but they do influence the short-term as well as long-term decision making of the firm. Empirical studies with respect to their effect on financing decisions of the firm are somewhat under researched particularly in the context of developing countries. The aim of the study was to analyse the effect of these instruments on the financing decisions of the non-financial firms listed on PSX for the period 2008-2015. Fixed effect model was used to analyse the effect of instruments of monetary policy and fiscal policy on the financing decisions of firms. Based on sample of 338 firms, the findings of the study revealed that instruments of monetary policy and fiscal policy do influence the financing decisions of the firm. M2, tax revenue and government debt has a significant effect on the debt ratio of listed firms whereas real interest rate is insignificantly related. Moreover, the relationship between real interest rate, M2 and tax revenue and debt ratio is negative whereas in case of government debt it is positive.

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Diaz-Roldan, Carmen, and Carmelo Monteagudo-Cuerva. "Fiscal policy under alternative monetary policy regimes." Business and Economic Horizons 9, no. 2 (July 15, 2013): 1–9. http://dx.doi.org/10.15208/beh.2013.5.

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Crosby, Mark. "Macroeconomic Policy: Demystifying Monetary and Fiscal Policy." Economic Record 88, no. 281 (June 2012): 295–96. http://dx.doi.org/10.1111/j.1475-4932.2011.00817.x.

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Adam, Klaus, and Roberto M. Billi. "Distortionary fiscal policy and monetary policy goals." Economics Letters 122, no. 1 (January 2014): 1–6. http://dx.doi.org/10.1016/j.econlet.2013.10.017.

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Taylor, John B. "Reassessing Discretionary Fiscal Policy." Journal of Economic Perspectives 14, no. 3 (August 1, 2000): 21–36. http://dx.doi.org/10.1257/jep.14.3.21.

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Recent changes in policy research and in policy-making call for a reassessment of countercyclical fiscal policy. Such a reassessment indicates that countercyclical fiscal policy should focus on automatic stabilizers rather than discretionary actions. Monetary policy has been reacting more systematically to output and inflation; long expansions in the 1980s and 1990s demonstrate policy effectiveness. It is unlikely that discretionary countercyclical fiscal policy could improve things, even with less uncertainty about fiscal impacts. A discretionary countercyclical fiscal policy could make monetary policy making more difficult. Discretionary fiscal policy should focus on long-run issues, such as tax reform and social security reform.

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Jia, Pengfei. "THE MACROECONOMIC IMPACT OF MONETARY-FISCAL POLICY IN A “FISCAL DOMINANCE” WORLD." Macroeconomic Dynamics 24, no. 3 (August 2, 2018): 670–707. http://dx.doi.org/10.1017/s1365100518000408.

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This paper focuses on the question of what monetary and fiscal policy can do and should do in a “fiscal dominance” world. I first highlight that both “amplification” and “fiscal cushion” effects are always at work jointly in determining the evolution of inflation. I find the threshold of maturity of government bonds beyond which more aggressive monetary policy dampens inflation volatility is three quarters. In addition, I conduct welfare analysis to quantitatively evaluate the costs and benefits brought by long-term debt. My results show that the threshold of government debt maturity above which an aggressive monetary policy improves welfare is eight quarters. More importantly, I characterize optimal monetary and fiscal policy using simple and implementable rules. My results indicate an optimal monetary and fiscal combination calls for an aggressive response in both rules. Finally, I find that optimized simple monetary-fiscal rule is significantly welfare inferior to the Ramsey optimal policy.

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de Jesus, Cleiton Silva, and Fernando Motta Correia. "Active fiscal policy and macroeconomic stability." Journal of Economic Studies 43, no. 5 (October 10, 2016): 749–62. http://dx.doi.org/10.1108/jes-03-2015-0052.

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Purpose The purpose of this paper is to investigate whether fiscal policy may be a complementary instrument to monetary policy in the macrostabilization process. Design/methodology/approach The authors developed a dynamic system with two linear differential equations in order to verify if an active fiscal policy can be compatible with macroeconomic equilibrium in three monetary policy regimes (conservative, alternative and hybrid). The authors also use numerical simulations because it is impossible to extract analytically full conclusions from the theoretical model. Findings The results suggest that fiscal policy can be a useful tool for macroeconomic stabilization; the counter-cyclical role of fiscal policy is compatible with dynamic equilibrium only if the monetary authority is not lenient towards inflation; and under an active fiscal policy a hybrid monetary regime is preferable to a conservative one. Originality/value This paper offers a theoretical contribution to explicate the macroeconomic implications of fiscal policy.

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Izzulhaq, Syahid, and Akhmad Syakir Kurnia. "The Credibility of Monetary Policy and Procyclical Fiscal Policy." Applied Economics and Finance 9, no. 1 (February 14, 2022): 121. http://dx.doi.org/10.11114/aef.v9i1.5482.

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If indiscipline fiscal policy could affect the monetary policy’s objective and effectiveness, is it necessarily mean that the status quo of monetary policy credibility would also be impacted? This paper addresses the issue by constructing a simple theoretical model and conducting empirical investigations using a dataset from 25 selected Inflation Targeting Framework countries throughout 2003-2017. By employing the Generalized Method of Moments, we find that the monetary policy will remain the status quo credible as the central bank would optimally respond to the disturbances originated from procyclical fiscal policy. However, such a response potentially crowds out domestic investment and slows down the economy, and induces financial instability. This implies that bearing the eye only on the status quo credibility of monetary policy is not sufficient, and the consideration over the fiscal policy behavior becomes crucial.

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Okorie, David Iheke, Manu Adasi Sylvester, and Dak-Adzaklo Cephas Simon-Peter. "Relative Effectiveness of Fiscal and Monetary Policies in Nigeria." Asian Journal of Social Science Studies 2, no. 1 (November 15, 2016): 117. http://dx.doi.org/10.20849/ajsss.v2i1.129.

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This study employs the auto regressive distributed lag (ARDL) model to ascertain the relative effectiveness of monetary and fiscal policies in Nigeria using a quarterly time-series from 1981-2012. From our analysis, it discovered that monetary and fiscal policies both have significant positive impact income. This conforms to a priori expectation and we discovered that monetary policy effects income faster than fiscal policy. In the short run, monetary policy effects income more than fiscal policy but the reverse is the case for the long run. Total impact of fiscal policy is higher than that of monetary policy. This study supports the use of both policies to achieve change in income but this depends on the objective the authorities want to achieve.

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Novoszáth, Péter. "Economic and Monetary Policy in Albania." Foreign Policy Review 15, no. 1 (2022): 89–124. http://dx.doi.org/10.47706/kkifpr.2022.1.89-124.

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This paper analyses Albania’s monetary policy in terms of the Albanian economic policy and monetary market, determining the effects of monetary policy and its consequences for some of the key macroeconomic indicators. The analysis concludes that the policy of the Albanian Central Bank, is applied in an unequal monetary market, since the money market is divided almost equally between foreign currency and the local currency, the Albanian lek (ALL). Fiscal consolidation is still necessary to safeguard debt sustainability. Rebuilding the fiscal space is particularly important because the Albanian economy lacks other stabilisation tools, and an independent monetary policy in particular. More effort should be made to shift budgets towards a more growth-oriented composition. In last year’s dialogue between the EU and the Western Balkans and Turkey, special attention was paid to the importance of fiscal rules and frameworks in improving fiscal governance.

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Tsuzuki, Eiji. "Dynamic Analysis of Two Policy Lags in a Kaldorian Model." Discrete Dynamics in Nature and Society 2015 (2015): 1–12. http://dx.doi.org/10.1155/2015/927138.

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We examine the effects of policy lags on local economic stability using a Kaldorian model. This study analyzes two cases: the case of a monetary policy with a time lag and the case of a policy with both fiscal and monetary lags. Similar to the case of fiscal policy lags examined in a previous study, monetary policy lags have destabilizing effects on economic stability. However, in the case of the existence of both fiscal and monetary policy lags, there is a possibility that a monetary policy lag can stabilize an economy.

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Bhattarai, Saroj, Jae Won Lee, and Choongryul Yang. "Redistribution and the Monetary-Fiscal Policy Mix." Finance and Economics Discussion Series 2021, no. 013 (March 1, 2021): 1–47. http://dx.doi.org/10.17016/feds.2021.013.

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We show that the effectiveness of redistribution policy in stimulating the economy and improving welfare is directly tied to how much inflation it generates, which in turn hinges on monetary-fiscal adjustments that ultimately finance the transfers. We compare two distinct types of monetary-fiscal adjustments: In the monetary regime, the government eventually raises taxes to finance transfers, while in the fiscal regime, inflation rises, effectively imposing inflation taxes on public debt holders. We show analytically in a simple model how the fiscal regime generates larger and more persistent inflation than the monetary regime. In a quantitative application, we use a two-sector, two-agent New Keynesian model, situate the model economy in a COVID-19 recession, and quantify the effects of the transfer components of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We find that the transfer multipliers are significantly larger under the fiscal regime—which results in a milder contraction—than under the monetary regime, primarily because inflationary pressures of this regime counteract the deflationary forces during the recession. Moreover, redistribution produces a Pareto improvement under the fiscal regime.

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Ali, Brekhna, and Mukamil Shah. "The Implication of Fiscal Variables in the Monetary Reaction Function of Pakistan." Global Economics Review VIII, no. I (March 30, 2023): 1–16. http://dx.doi.org/10.31703/ger.2023(viii-i).01.

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This paper investigates the influence of fiscal variables on the monetary reaction function innPakistan. The main concern of a macroeconomic policy is to achieve sustainable growth and to keep a low level of inflation in the economy. For empirical analysis, the Autoregressive Distributive Lag model (ARDL) is applied using quarterly data for the period 2004Q1 to 2020Q4. The empirical evidence reveals that the monetary policy instrument in the monetary reaction function is explained significantly by the fiscal policy variables both in the short and long-run. Monetary policy independently cannot control inflation unless it has the support of the fiscal policy. Therefore, for an optimal policy mix, a wise monetary policy must be followed by a comprehensive fiscal policy in the case of Pakistan.

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Al-shawarby, Sherine, and Mai El Mossallamy. "Monetary-fiscal policies interactions and optimal rules in Egypt." Review of Economics and Political Science 4, no. 2 (June 5, 2019): 138–57. http://dx.doi.org/10.1108/reps-03-2019-0033.

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Purpose This paper aims to estimate a New Keynesian small open economy dynamic stochastic general equilibrium (DSGE) model for Egypt using Bayesian techniques and data for the period FY2004/2005:Q1-FY2015/2016:Q4 to assess monetary and fiscal policy interactions and their impact on economic stabilization. Outcomes of monetary and fiscal authority commitment to policy instruments, interest rate, government spending and taxes, are evaluated using Taylor-type and optimal simple rules. Design/methodology/approach The study extends the stylized micro-founded small open economy New Keynesian DSGE model, proposed by Lubik and Schorfheide (2007), by explicitly introducing fiscal policy behavior into the model (Fragetta and Kirsanova, 2010 and Çebi, 2011). The model is calibrated using quarterly data for Egypt on key macroeconomic variables during FY2004/2005:Q1-FY2015/2016:Q4; and Bayesian methods are used in estimation. Findings The results show that monetary and fiscal policy instruments in Egypt contribute to economic stability through their effects on inflation, output and debt stock. The monetary policy Taylor rule estimates reveal that the Central Bank of Egypt (CBE) attaches significant importance to anti-inflationary policy and (to a lesser extent) to output targeting but responds weakly to nominal exchange rate variations. CBE decisions are significantly influenced by interest rate smoothing. Egyptian fiscal policy has an important role in output and government debt stabilization. Additionally, the fiscal authority chooses pro-cyclical government spending and counter-cyclical tax policies for output stabilization. Again, past values of the fiscal instruments are influential in the evolution of the future fiscal policy-making process. Originality/value A few studies have examined the interaction between monetary and fiscal policy in Egypt within a unified framework. The presented paper integrates the monetary and fiscal policy analysis within a unified dynamic general equilibrium open economy rational expectations framework. Without such a framework, it would not be easy to jointly analyze monetary and fiscal transmission mechanisms for output, inflation and debt. Also, it would be neither possible to contrast the outcome of monetary and fiscal authorities commitment to a simple Taylor instrument rule vis-à-vis optimal policy outcomes nor to assess the behavior of monetary and fiscal agents in macroeconomic stability in context of an active/passive policy decisions framework.

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Cahyadi, Rahmad, Ahmad Albar Tanjung, and Sukardi . "Impact of Monetary Policy and Fiscal Policy on Gross Domestic Product in Indonesia." International Journal of Research and Review 10, no. 1 (February 3, 2023): 688–97. http://dx.doi.org/10.52403/ijrr.20230177.

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This study aims to determine which policies are effectively implemented between monetary policy and fiscal policy for Indonesia's gross domestic product. The data used is the annual Secondary time series data from 1990-2020. Research variables are estimated using a quantitative approach that is two Stage Least Square (TSLS) model. Policy is said to be more effective if the policy is able to affect the increase in gross domestic product higher than other policies. The ability of the policy to influence the increase in gross domestic product is indicated by the magnitude of the variable significance value of the policy. The results showed that the monetary policy represented by the variable amount of money in circulation amounted to 0.00 and fiscal policy represented by the variable government spending amounted to 0.07. So it can be concluded that monetary policy will be more effective in affecting gross domestic product compared to fiscal policy. Based on the values obtained, then confirm the findings of the Mundell-Fleming theory which states that a small open economy with a floating exchange rate system is more effective using monetary policy than fiscal policy. Keywords: Monetary Policy, Fiscal Policy, Two Stage Least Squares, Gross Domestic Product, Mundell Fleming.

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Vasiljev, Tamara Bašić. "Estimated DSGE Model for Monetary and Fiscal Polic Coordination Analysis – The Case of Serbia." Journal of Central Banking Theory and Practice 7, no. 1 (January 1, 2018): 145–73. http://dx.doi.org/10.2478/jcbtp-2018-0007.

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AbstractWe present a new-Keynesian model for small open economy, with price rigidities stemming from a Calvo pricing scheme (1983), monopolistic banking system, financial dollarization of the economy and monetary and fiscal policy governed by rules. We estimate the model on Serbian data and propose various model extensions that could be used for monetary and fiscal policy analysis. We consider 6 combinations of monetary and fiscal policy regimes, inflation targeting and currency peg on one hand, and discretionary cyclically neutral fiscal policy and fiscal rules, on the other. The model with inflation targeting and discretionary fiscal policy fits the data best.

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Hanipah, Hanipah, Pegi Sugiartini, and Indi Millatul Maula. "Analysis of the Impact of Government Fiscal and Monetary Policies on Economic Growth in Indonesia: Government Economic Approach." Journal of Social Research 2, no. 11 (October 11, 2023): 3867–71. http://dx.doi.org/10.55324/josr.v2i11.1498.

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Government economics is the study of how government policies influence a country's economic activities. In this case, fiscal and monetary policies are the two main instruments used by the government to control economic growth. In Indonesia, fiscal and monetary policies are used to increase economic growth and overcome economic problems faced by the country. Qualitative methods that can be used in this research are case studies or field research. This research aims to analyze the influence of fiscal and monetary policy on economic growth in Indonesia. The research results show that fiscal and monetary policies have a significant effect on economic growth in Indonesia. Fiscal policy, as measured by the ratio of government debt to GDP and government spending, has a positive influence on economic growth. that fiscal and monetary policies have a significant influence on economic growth in Indonesia. Fiscal policy, particularly government spending on infrastructure projects and social programs, has a positive impact on economic growth. Meanwhile, monetary policy, such as interest rate policy and banking regulations, has a less significant influence.

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Olisah, Remigius. "MONETARY AND FISCAL POLICY COORDINATION IN NIGERIA." Social Science and Law Journal of Policy Review and Development Strategies 8, no. 1 (November 8, 2021): 116–32. http://dx.doi.org/10.48028/iiprds/ssljprds.v8.i1.09.

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This paper seeks to examine monetary and fiscal policy coordination in Nigeria. It discussed monetary policy as expansionary or contractionary, showing the various tools of monetary policy instruments in the country. Data are generated from secondary sources and evaluated through content analysis. The study is anchored by the Monetarist theory of inflation. Various literature examined shows that with declining oil prices and production challenges in an oil-dependent economy, achieving the growth projection requires better coordination of fiscal and monetary policies in a way that supports the non-oil sector. The government must develop and strengthen effective monetary and fiscal policy using appropriate instruments and international best practices.

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Tai Nguyen, Trong, Thuy Duong Phan, and Ngoc Anh Tran. "Impact of fiscal and monetary policy on inflation in Vietnam." Investment Management and Financial Innovations 19, no. 1 (March 1, 2022): 201–9. http://dx.doi.org/10.21511/imfi.19(1).2022.15.

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High and sustainable growth of gross domestic product with stable inflation is one of the objectives of the most macroeconomic policies both in the world and in Vietnam. Therefore, price stability plays a vital role in assuring GDP growth. In order to stabilize prices, fiscal and monetary policies need to be appropriately managed. The aim of this study is to assess the impact of the monetary and fiscal policies on inflation in Vietnam during the period from 1997 to 2020. This study has applied the vector autoregression (VAR) model along with data gathered from the World Bank and General Statistics Office of Vietnam. The research results indicate that Vietnam’s inflation is positively influenced by a fiscal deficit (2.943), money supply (2.672), government expenditure (8.347), and interest rate (3.187). Among the factors, government expenditure has the biggest influence on inflation. Besides, trade openness (–0.311) also influences inflation, but the effect is negative and negligible. Finally, the policy implications are focused on coordinating fiscal and monetary policies maintaining a moderate level of inflation for economic growth. AcknowledgmentThis article is funded from the funding source of the research: “Solutions to deal with the risk of financial instability from support packages to fight economic recession caused by the covid-19 pandemic” with code B2022-MHN-02 by Vietnam Misnistry of Education and Training.

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Sims, Christopher A. "Paper Money." American Economic Review 103, no. 2 (April 1, 2013): 563–84. http://dx.doi.org/10.1257/aer.103.2.563.

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Drastic changes in central bank operations and monetary institutions in recent years have made previously standard approaches to explaining the determination of the price level obsolete. Recent expansions of central bank balance sheets and of the levels of richcountry sovereign debt, as well as the evolving political economy of the European Monetary Union, have made it clear that fiscal policy and monetary policy are intertwined. Our thinking and teaching about inflation, monetary policy, and fiscal policy should be based on models that recognize fiscal-monetary policy interactions. (JEL E31, E52, E58, E62, H63)

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Bello, Abdulmajeed Kumo, Joshua Adams Ndako, Fadimah Yusuf, and Amodu Amina Ejura. "Fiscal Dominance and Monetary Policy Efficacy in Nigeria." International Journal of Research and Innovation in Social Science VII, no. X (2023): 857–77. http://dx.doi.org/10.47772/ijriss.2023.701068.

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This study examines the effects of fiscal dominance on monetary policy efficacy in Nigeria. Specifically, it examines the extent to which fiscal deficits influenced the growth of money supply and inflation in Nigeria. It utilizes money growth accounting as the framework, and it is estimated through the Autoregressive Distributed Lag (ARDL) Model to achieve the objectives of the study. The results show that fiscal deficit has a positive and significant relationship with the inflation rate in Nigeria. This indicates evidence of fiscal dominance for Nigeria and that fractions of Nigerian inflationary pressures emanate from fiscal deficits, thus, hampering the efficacy of monetary policy. The study, therefore, suggests that policy attempts to stabilize prices in Nigeria must not only be monetary in nature but must also take cognizance of fiscal actions into considerations. Hence, there is need for continuous fiscal-monetary policy coordination to ensure a delicate balance between the duo in achieving key macroeconomic objectives.

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Wolf, Christian K. "Fiscal Stimulus and the Systematic Response of Monetary Policy." AEA Papers and Proceedings 113 (May 1, 2023): 388–93. http://dx.doi.org/10.1257/pandp.20231072.

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Economic theory suggests that the effects of fiscal stimulus can vary substantially with the systematic response of monetary policy. Empirical estimates of the causal effects of fiscal shocks implicitly embed a particular monetary reaction: they provide treatment effects that average across in-sample monetary policy. Building on McKay and Wolf (2022), I discuss how evidence on monetary policy shocks can be used to predict the effects of fiscal stimulus under arbitrary monetary policy reaction. I review the underlying theory, propose a simple empirical strategy, and present an application.

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Atmojo, Ridho Windi. "Analisis Efektivitas Kebijakan Moneter dan Kebijakan Fiskal terhadap Produk Domestik Bruto Indonesia." Economics Development Analysis Journal 7, no. 2 (May 31, 2018): 194–202. http://dx.doi.org/10.15294/edaj.v7i2.20160.

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Dari data-data empiris tingkat pertumbuhan ekonomi Indonesia berdasarkan pada PDB banyak mengalami penurunan. Untuk meningkatkan PDB Indonesia, maka dilakukan penelitian efektiv mana kebijakan moneter atau fiskal dalam mempengaruhi PDB Indonesia. Penelitian ini memakai model IS-LM dengan menggunakan metode Two-Stage Least Square (TSLS) untuk mengestimasi variabel yang ada dalam penelitian. Hasil penelitian menunjukan bahwa nilai PDB Indonesia dengan menggunakan IS-LM sebesar 2034769.68 miliar dan tingkat bunga berada di -8.78 persen. multiplier kebijakan fiskal sebesar 0.63 dan nilai multiplier moneter sebesar 1.72. From the empirical data, Indonesia's economic growth rate based on GDP has decreased a lot. To increase Indonesia's GDP, an effecve research is conducted where the monetary or fiscal policy in influencing Indonesia's GDP. This research uses IS-LM model by using Two-Stage Least Square (TSLS) method to estimate the variables in the research. The results showed that the value of Indonesia's GDP using IS-LM amounted to 2034769.68 billion and the interest rate was at -8.78 percent. fiscal policy multiplier of 0.63 and a monetary multiplier value of 1.72.

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Sanusi, Kazeem Abimbola, and Zandri Dickason-Koekemoer. "Fiscal and Monetary Policies Interactions in Nigeria and South Africa: Dynamic Stochastic General Equilibrium Approach." International Journal of Economics and Financial Issues 13, no. 5 (September 13, 2023): 21–31. http://dx.doi.org/10.32479/ijefi.14551.

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The interaction between fiscal and monetary policies in achieving macroeconomic goals has been a subject of debate, particularly on whether they complement or substitute each other. This issue arises when both policy authorities are independent of each other. This study aims to revisit the interaction of fiscal and monetary policies in Nigeria and South Africa using a dynamic stochastic general equilibrium model (DSGE) and calibration technique. The model consists of 20 equations that illustrate the behaviour of endogenous variables. The parameters are obtained from relevant DSGE literature and economic intuitions about the two economies. The findings reveal that fiscal and monetary policy variables interact in both economies. Inflation responds to fiscal policy shocks such as government spending, revenue and borrowing shocks. Monetary authorities’ decisions such as interest rates and inflation also affect fiscal policy variables. However, the performance of monetary and fiscal policy variables is better in South Africa than in Nigeria. The study recommends closer coordination between the monetary and fiscal authorities in both economies to resolve policy design and implementation issues. Government monitoring and assessment units should also be strengthened to track the implementation and delivery of policies decided upon at coordination meetings.

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Nuru, Naser Yenus. "Monetary and fiscal policy effects in South African economy." African Journal of Economic and Management Studies 11, no. 4 (May 4, 2020): 625–38. http://dx.doi.org/10.1108/ajems-08-2019-0308.

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PurposeThe main purpose of this study is to see the macroeconomic effects of monetary and fiscal policy shocks in South Africa.Design/methodology/approachThe joint effects of monetary and fiscal policy are analyzed by applying short-run contemporaneous restrictions for the identification of shocks in an SVAR in order to derive impulse response functions. Hence, a general AB model of (Amisano and Giannini, 1997) identification scheme, which is not recursive, is employed in this study.FindingsThe author shows that monetary tightening leads to a fall in real economic activity and depreciates the exchange rate. And in regard to the fiscal policy, the author calculates an initial government spending multiplier of 0.20, which later peaks at 0.40. The tax multiplier is almost 0 on impact and statistically insignificant. However, the author finds evidence supporting the existence of accommodative stance between monetary policy and fiscal policy, which is important for economic and political decision-making.Originality/valueEmpirical studies that deal with the joint effects of monetary and fiscal policy for South Africa through the SVAR framework are quite limited. This paper, therefore, contributes to the empirical literature on the effects of monetary and fiscal policy in a small open economy like South Africa.

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JACKSON, Emerson Abraham. "Economics of Fiscal Dominance and Ramifications for the Discharge of Effective Monetary Policy Transmission." Theoretical and Practical Research in Economic Fields 15, no. 1 (March 29, 2024): 31. http://dx.doi.org/10.14505/tpref.v15.1(29).03.

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This paper explores the intricate dynamics of fiscal dominance and its profound implications for monetary policy efficacy, contributing to the discourse on the interplay between fiscal and monetary policies. The theoretical foundation critically examines existing literature, integrating empirical evidence to construct a comprehensive understanding. Model blocks strategically elucidate the significance of fiscal variables in shaping monetary transmission mechanisms. The ensuing analysis scrutinises the disruptive potential of fiscal dominance on conventional monetary policy tools. The conclusion navigates policy recommendations, emphasising the necessity of coordinated fiscal-monetary strategies to effectively mitigate inflationary pressures. This research provides a nuanced perspective for policymakers, offering theoretical depth and empirical insights to guide decisions in addressing the complex challenges posed by fiscal dominance in economic governance.

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Pasichnyi, Mykola. "Fiscal and monetary instruments of impact on economic development." University Economic Bulletin, no. 48 (March 30, 2021): 215–24. http://dx.doi.org/10.31470/2306-546x-2021-48-215-224.

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The research subject includes the theoretical basis and mechanism of fiscal and monetary policy coordination. The study aims to justify the conceptual basis of fiscal- monetary policy interactions to ensure economic development. Methods. To achieve the appropriate tasks, we used a set of methods and approaches that helped ensure our investigation's conceptual unity. The systemic and structural approaches, analysis and synthesis methods, comparison, generalization, modeling, and scientific abstraction are applied. Results. In this paper, we improved the theoretical and methodological foundations of fiscal and monetary policy coordination. The author highlighted the necessity to use the institutional approach in that case. Also, we gave practical proposals to develop the system for assessing the effectiveness of the coordination of fiscal and monetary policy. Practical implications. Government economic policy and instruments of its implementation. Conclusions. Empirical experience has shown the advisability of fiscal and monetary policy coordination to ensure sustainable endogenous economic growth. Coordination of government financial policy measures in the context of the economic cycle stages should be based on an institutional approach. The interaction of fiscal and monetary policies should focus on increasing social welfare and the maintenance of long-term macroeconomic stability. The adaptive interaction of monetary and fiscal mechanisms and the improvement of the state's economic system's institutional architectonics contribute to the intensification of business entities' economic activity. Meanwhile, those factors positively influence on economy's competitiveness. The necessity of introducing a system for assessing the effectiveness of the coordination of fiscal and monetary policy determines effective measures of financial regulation at a certain stage of economic development.

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Ubid, Basim Khamees. "Analysis of the Relationship between Fiscal Policy Shocks and Monetary Stability in Iraq's Economy for the Period 1990-2018." International Academic Journal of Economics 9, no. 1 (May 16, 2022): 11–19. http://dx.doi.org/10.9756/iaje/v9i1/iaje0902.

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The research aims to measure the impact of positive and negative fiscal policy shocks on monetary stability in Iraq, which represents monetary stability as an indicator of real and price stability. Fiscal policy shocks are quantitative changes in public spending and public revenue affecting the output and price cycle, and fiscal policy despite the accompanying time gaps, but it remains a policy Influential and has a significant degree of impact on economic growth and development in developing countries. The fiscal policy represents a numerical translation of the economic and social objectives planned in the state's general budget tool consistent with the GDP cycle. The economic and social goals stem from the core of the functions and the main objectives of the fiscal policy, namely the allocation of resources, stability and restoration Distribution and these functions, as we know, free market techniques may fail to achieve them, which interferes with the financial policy to address the failure of the market to reach the set goals, and that coordination between fiscal and monetary policies does not mean a loss of independence as much as it means correcting fiscal and monetary policies without causing undesirable adverse effects upon the necessary correction. For local courses Opposing this coordination, and we have touched on the monetary stability index adopted by the International Monetary Fund (IMF) to discuss the impact of financial shocks on the monetary stability index in Iraq, where the Iraqi economy witnessed positive fiscal and revenue policy shocks with limited negative financial shocks in spending. Public and public revenue and the impact was studied through the existence of long-term relationships that link fiscal policy shocks, i.e. quantitative changes in public spending and public revenue on monetary stability. The boundary test within the Autoregression techniques of distributed Lag demonstrated the existence of a long-term relationship between fiscal policy shocks and monetary stability in Iraq.

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Waheed, Farah, and Abdul Rashid. "Credit frictions, fiscal imbalances, monetary policy autonomy, and monetary policy rules." Journal of Economic Asymmetries 23 (June 2021): e00192. http://dx.doi.org/10.1016/j.jeca.2020.e00192.

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Sandoyan, Edward M., Mariam H. Voskanyan, Ani H. Galstyan, and Gagik A. Grigoryan. "State's countercyclic fiscal and monetary policy in the field of macroeconomic regulation." Research result Economic Research 7, no. 3 (October 1, 2021): 13–40. http://dx.doi.org/10.18413/2409-1634-2021-7-3-0-2.

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The problem of countercyclical fiscal and monetary regulation has become very ur- gent in the last two decades. This article is devoted to the analysis and assessment of countercyclical fiscal and monetary policy from the point of view of the fundamental basis, as well as its practical application. The subject of this research is countercycli- cal fiscal and monetary policy from the point of view of its effectiveness in the con- text of the economic crisis. The methodological basis of the study is an overview of theoretical and practical models of countercyclical fiscal and monetary policy known in the scientific literature. The key objective of the study was to attempt to identify and evaluate countercyclical fiscal and monetary policies from the point of view of theory and practice. The result of the study was the conclusion that in a crisis, coun- tercyclical fiscal and monetary policy leads to ambiguous results, but on the whole, it is the most optimal for leveling the consequences of the crisis.

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Bhattarai, Saroj, Jae Won Lee, and Choongryul Yang. "Redistribution and the Monetary-Fiscal Policy Mix." Finance and Economics Discussion Series 2021, no. 013r1 (September 23, 2022): 1–55. http://dx.doi.org/10.17016/feds.2021.013r1.

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We show that the effectiveness of redistribution policy is tied to how much inflation it generates, and thereby, to monetary-fiscal adjustments that ultimately finance the transfers. In the monetary regime, taxes increase to finance transfers while in the fiscal regime, inflation rises, imposing inflation taxes on public debt holders. We show analytically that the fiscal regime generates larger and more persistent inflation than the monetary regime. In a two-sector model, we quantify the effects of the CARES Act in a COVID recession. We find that transfer multipliers are larger, and that moreover, redistribution is Pareto improving, under the fiscal regime.

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Journal articles on the topic 'Monetary and Fiscal Policy'

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