IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2022-170.html
   My bibliography  Save this paper

Effective Fiscal-Monetary Interactions in Severe Recessions

Author

Listed:
  • Mr. Jiaqian Chen
  • Mr. Raphael A Espinoza
  • Carlos Goncalves
  • Tryggvi Gudmundsson
  • Martina Hengge
  • Zoltan Jakab
  • Jesper Lindé

Abstract

The COVID-19 pandemic and the subsequent need for policy support have called the traditional separation between fiscal and monetary policies into question. Based on simulations of an open economy DSGE model calibrated to emerging and advance economies and case study evidence, the analysis shows when constraints are binding a more integrated approach of looking at policies can lead to a better policy mix and ultimately better macroeconomic outcomes under certain circumstances. Nonetheless, such an approach entails risks, necessitating a clear assessment of each country’s circumstances as well as safeguards to protect the credibility of the existing institutional framework.

Suggested Citation

  • Mr. Jiaqian Chen & Mr. Raphael A Espinoza & Carlos Goncalves & Tryggvi Gudmundsson & Martina Hengge & Zoltan Jakab & Jesper Lindé, 2022. "Effective Fiscal-Monetary Interactions in Severe Recessions," IMF Working Papers 2022/170, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/170
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=522755
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    monetary policy rate; government spending hike; recession scenario; rate in Botswana; hike in liquidity trap; open economy; Inflation; Inflation targeting; Fiscal stimulus; Africa; Global;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2022/170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.