Economics of Fiscal Dominance and Ramifications for the Discharge of Effective Monetary Policy Transmission

Emerson Jackson

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper explores the intricate dynamics of fiscal dominance and its profound implications for monetary policy efficacy, contributing to the discourse on the interplay between fiscal and monetary policies. The theoretical foundation critically examines existing literature, integrating empirical evidence to construct a comprehensive understanding. Model blocks strategically elucidate the significance of fiscal variables in shaping monetary transmission mechanisms. The ensuing analysis scrutinises the disruptive potential of fiscal dominance on conventional monetary policy tools. The conclusion navigates policy recommendations, emphasising the necessity of coordinated fiscal-monetary strategies to effectively mitigate inflationary pressures. This research provides a nuanced perspective for policymakers, offering theoretical depth and empirical insights to guide decisions in addressing the complex challenges posed by fiscal dominance in economic governance.

Keywords: Fiscal Dominance; Monetary policy; Inflationary Pressures; Economic Growth (search for similar items in EconPapers)
JEL-codes: E31 H62 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:281440

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