Mutual Dependency of Monetary and Fiscal Measures: Causes and Implications (A Study of Post Reform Period)
Journal Title: International Journal of Economics, Commerce and Research (IJECR) - Year 2017, Vol 7, Issue 4
Abstract
Fiscal and monetary policies are two important tools, which have been used by the state to achieve its macroeconomic objectives. Since independence, fiscal policy has been used as major macro-economic policy, and monetary policy has worked as the subsidiary of fiscal policy. In the financial sector, monetary policy has gained the autonomous position, from the subsidiary status of the pre - reform period. Now the monetary policy is being considered as an affective macro-economic policy and in certain cases, more effective than fiscal policy. This study explains how is monetary and fiscal policy, interacting to each other to achieve the common macro-economic objective of high growth, moderate inflation, low unemployment and high level of equity in society? In which way monetary and fiscal policies are interdependent to each other? Which is the macro-economic objectives, where monetary policy could respond better, and where fiscal measures may be more effective? And at the last, how is the relative position of monetary and fiscal policy changing in the context of increasing market oriented policies?
Authors and Affiliations
Anita Tyagi
Keywords
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