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Monetary and Fiscal Policies in Bulgaria: Lessons from the Historical Record

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  • Kalina Dimitrova

Abstract

There are two aspects through which an economic policy can influence the economic situation – monetary and fiscal. Monetary and fiscal policies have different and sometimes controversial goals to achieve by means of specific instruments. While the mission of central banks is generally price stability, governments usually set their goals in the realm of economic growth and employment. Fiscal institutions , however, often use inflation in order to derive revenues (seigniorage) and finance budget deficits. Hence, inflation is viewed as a public finance phenomenon (Barro, 1979; Mankiw, 1987; Grilli, 1989). The purpose of this paper is to present a historical perspective on the behaviour of the monetary and fiscal policies pursued in Bulgaria from 1879, when the Bulgarian National Bank was established (soon after the liberation from the Ottoman Empire). Furthermore, historical time series of monetary and fiscal indicators give us the chance to study the link between government budget problems, fluctuations of monetary variables and inflation dynamics in different monetary episodes.

Suggested Citation

  • Kalina Dimitrova, 2010. "Monetary and Fiscal Policies in Bulgaria: Lessons from the Historical Record," ICER Working Papers 13-2010, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:13-2010
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    References listed on IDEAS

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    Cited by:

    1. Kalina Dimitrova & Luca Fantacci, 2010. "Financial stability, monetary autonomy and fiscal interference: Bulgaria in search of its way, 1879-1913," William Davidson Institute Working Papers Series wp979, William Davidson Institute at the University of Michigan.
    2. Sabaté, Marcela & Fillat, Carmen & Escario, Regina, 2019. "Budget deficits and money creation: Exploring their relation before Bretton Woods," Explorations in Economic History, Elsevier, vol. 72(C), pages 38-56.

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    More about this item

    Keywords

    monetary and fiscal policy; inflation; exchange rate;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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