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General Aspects of Monetary and Fiscal Policy Coordination

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  • Damir Šehović

    (Faculty of Economics Podgorica)

Abstract

The main objective of macroeconomic policy is achieved by using instruments available to its makers, and certainly one of the most important is the one related to monetary and fiscal policy. However, the use of the mentioned instruments is complex, given the fact that they are in the hands of the monetary and fiscal authorities that are separate, and that often have conflicting goals. This is one of the key reasons why it is necessary to establish an appropriate mechanism for coordination among them, which would ensure a synchronized economic policy. That is why there are a number of theoretical and empirical researches that proved the justification of coordination between two key instruments of economic policy. At preventing various imbalances that may arise as a result of inadequate coordination, it is necessary to establish a range of different institutional and operational arrangements, which will, in addition, save the credibility of these policies.

Suggested Citation

  • Damir Šehović, 2013. "General Aspects of Monetary and Fiscal Policy Coordination," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(3), pages 5-27.
    • Handle: RePEc:cbk:journl:v:2:y:2013:i:3:p:5-27
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    More about this item

    Keywords

    monetary policy; fiscal policy; coordination; institutional arrangements; operational arrangements;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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