General Aspects of Monetary and Fiscal Policy Coordination

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.