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The Interaction Between Monetary and Fiscal Policies

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  • David Dodge

Abstract

One can view the period since 1970 as one in which the authorities struggled to establish appropriate medium- term anchors for both monetary and fiscal policies. During this time, they learned about the appropriate interaction between those two policies in the context of economic stabilization and growth under a flexible exchange rate regime. This lecture deals with four interrelated topics: the appropriate goals for fiscal and monetary policy, building policy credibility, the appropriate stabilization role for the two policies, and policy cooperation. The transparent medium-term frameworks that have been established by the authorities will be extremely helpful in meeting the challenges that the future is sure to bring. These frameworks mean that the required adjustments in the economy will take place against a relatively stable background.

Suggested Citation

  • David Dodge, 2002. "The Interaction Between Monetary and Fiscal Policies," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 187-201, June.
  • Handle: RePEc:cpp:issued:v:28:y:2002:i:2:p:187-201
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    Cited by:

    1. Pierre Fortin, 2003. "Issues and Commentaries Issues et commentaires Keynes Resurrected," Canadian Public Policy, University of Toronto Press, vol. 29(2), pages 253-265, June.
    2. Matteo Luciani, 2004. "A VAR Model for the Analysis of the Effects of Monetary Policy in the Euro Area," Rivista di Politica Economica, SIPI Spa, vol. 94(6), pages 175-214, November-.
    3. Christopher Allsopp, 2002. "Macroeconomic Policy Rules in Theory and in Practice," Discussion Papers 10, Monetary Policy Committee Unit, Bank of England.
    4. David A. Dodge, 2002. "Central bank perspectives on stabilization policy," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 79-87.
    5. David A. Dodge, 2002. "Overview : rethinking stabilization policy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 421-429.
    6. Pablo Mendieta Ossio & Hugo Rodriguez Gonzales, 2005. "Interacción de la política fiscal con la política monetaria en el MERCOSUR y países asociados," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 8(1), pages 49-97, December.
    7. Lupia, Arthur & Grafstrom, Cassandra & Krupnikov, Yanna & Levine, Adam Seth & MacMillan, William & McGovern, Erin, 2007. "Loonies Under Your Bed: Misdirected Attention and the Diluted Value of Stock Market Reports," MPRA Paper 4912, University Library of Munich, Germany.

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