The Fiscal Effects of Monetary Policy

Author/Editor:

Momi Dahan

Publication Date:

May 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1998/066

Subject:

Budget planning and preparation Government debt management Monetary aggregates Monetary tightening Public debt

Frequency:

semi- annual

English

Publication Date:

May 1, 1998

ISBN/ISSN:

9781451962185/1018-5941

Stock No:

WPIEA0661998

Pages:

19

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