The Fiscal Effects Of Monetary Policy

Download or read book The Fiscal Effects of Monetary Policy written by Momi Dahan and published by International Monetary Fund. This book was released on 1998-05 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a simple framework to examine the budgetary implications of monetary policy measures. It further outlines, using this framework, the various channels of influence that tight monetary policy may have on the budget deficit. The cumulative effect might be quantitatively large although each effect might be small. Most of the effects tend to increase the budget deficit as result of tight monetary policy, but tight monetary policy causes a short-run decrease in the government debt. Thus, macroeconomic policy coordination should be considered.