Fiscal-monetary Mix Research Articles

Run Effects of the Short-Run Stabilization Policies in Ukraine

Based on of the quarterly data for the period of 2002-2021 and with the application of ARDL estimates it has been established that in the case of recession there are short-run expansionary effects of government expenditures and exchange rate appreciation. However, government expenditures become contractionary in the long run, along with monetary policy tightening. Liberalisation of economic environment, as indicated by the Index of Economic Freedom from the Heritage Foundation, is expansionary in the long run. Finally, about 80% of deviation from the long-run relationship is corrected in the short run. Key words: stabilization policy, fiscal-monetary mix, exchange rate, Ukraine, error-correction model (ARDL)

Reforming economic governance in Europe: exploring the road to effective coordination

The European Union is at a crossroad. In recent years it has been going through a major review of its institutional design without, however, clearly defining its role and scope. The credibility of its institutions is adversely affected by the widening gap between ambitious economic goals and the dismal performance of the economy in some member countries. Structural reforms have been progressing at a painfully slow pace. Popular support has been decreasing alarmingly. The need to confront poor economic performance and to embark on urgent market-structural reforms, as well as the problem of harmonizing national interests with those of the EU as a whole, have highlighted how the institutions and processes can be dovetailed. This article aims at contributing to the debate on economic governance and policy coordination in Europe. Looking at the genesis and the recent reform of the Stability and Growth Pact, it focuses on how the European Monetary Union macroeconomic policies are likely to be governed in the future and what the possibilities are for establishing effective economic and monetary governance. The Pact represents the most developed, albeit controversial, attempt to provide a framework for coordination of policies among sovereign states. Such coordination should help to achieve an appropriate fiscal–monetary mix, enhancing the credibility of monetary policy by insisting that member states governments do not spend more than they can finance through taxation. The Pact's recent revision is certainly the first step in the right direction, especially because it links macroeconomic stability with the goals of the Lisbon Agenda–job creation, market-structural reforms and social cohesion.

Fiscal-Monetary Mix and Exchange Rate Movements in the Major Industrial Countries, 1980-84

This paper analyzes the financial policies pursued in the major industrial countries under the flexible exchange rate regime, and links misalignments in policies and their mixes to exchange rate variations among the major currencies. A number of indicators note that misalignments in fiscal policy led to a corresponding divergence of fiscal and monetary policy mix among the industrial countries, and, together, contributed to the rapid appreciation of the dollar during the early 1980s. The continued liberalization of international capital movements and the differences in the savings rate also amplified the effects of policy divergences and their mixes on the exchange rate movements.

Fiscal-Monetary Mix and Exchange Rate Movements in the Major Industrial Countries, 1980-1984

Fiscal-Monetary Mix and Exchange Rate Movements in the Major Industrial Countries, 1980-1984

U.S. Fiscal Policy, Keynes, and Keynesian Economics

It is now half a century ago that The General Theory exploded onto the scene and set the stage of macro economics for a generation to come. Central to the new vision was the proposition that good micro intentions may yield bad macro results, that the economy may get stuck in underemployment equilibrium, and that fiscal policy (deficit finance) offered the avenue of escape. Monetary policy, still dominant in Keynes's Treatise, thus lost its role as the key instrument of macro management, disqualified by the disabilities of an infinitely elastic L and/or inelastic I function. The early Keynesian view, not entirely shared by Keynes himself, exaggerated fiscal dominance and monetary futility. Monetary policy, however, came to be reinstated two decades later in the neoclassical model of the 1950s and 1960s. Added concern with growth further called for reinterpretation of the appropriate fiscalmonetary mix, and the advent of inflation changed the dimensions of macro policy. Nevertheless, fiscal policy has retained a key role. Not that this key role has been a matter of pure economics only. Whereas monetary policy operates in what appears (although may not be) a rarefied atmosphere of political detachment, fiscal policy clashes head on with such controversial issues as the size of the budget and the question of who should pay. While I tried some decades ago to separate