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A Systematic Review of the Association between Fiscal Policy and Monetary Policy: Interactions, Challenges, and Implications

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  • Yeboah, Samuel

Abstract

This systematic review examines the association between fiscal policy and monetary policy, focusing on their interactions, channels of influence, policy coordination challenges, and the macroeconomic effects of their interactions. The review highlights the importance of time lags, policy mix, policy independence, international interactions, and political economy considerations in shaping the association between fiscal and monetary policies. It also explores the implications of fiscal and monetary policy interactions for financial stability, sectoral effects, public debt management, and the transmission of monetary policy. Furthermore, the review emphasizes the role of institutional frameworks and rules-based policy frameworks in enhancing the effectiveness and credibility of fiscal and monetary policies. Overall, a comprehensive understanding of the association between fiscal and monetary policies is crucial for policymakers to design coordinated and effective policy frameworks that promote macroeconomic stability and sustainable growth.

Suggested Citation

  • Yeboah, Samuel, 2022. "A Systematic Review of the Association between Fiscal Policy and Monetary Policy: Interactions, Challenges, and Implications," MPRA Paper 117530, University Library of Munich, Germany, revised 15 Dec 2022.
    • Handle: RePEc:pra:mprapa:117530
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal policy; monetary policy; policy coordination; time lags; policy mix; policy independence; international interactions; financial stability; sectoral effects; public debt management; the transmission of monetary policy; institutional frameworks;
    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
    • 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
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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