{
  "title": "Effective Fiscal-Monetary Interactions in Severe Recessions",
  "publication": "IMF Working Papers, September 2, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/09/02/effective-fiscal-monetary-interactions-in-severe-recessions-522755",
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  "summary": "The COVID-19 pandemic and the subsequent need for policy support have called the traditional separation between fiscal and monetary policies into question.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Publication: IMF Working Papers\n- Title: \"Effective Fiscal-Monetary Interactions in Severe Recessions\"\n- Authors: Jiaqian Chen, Raphael A Espinoza, Carlos Goncalves, Tryggvi Gudmundsson, Martina Hengge, Zoltan Jakab, Jesper Lindé\n- Date: September 2, 2022\n- Core question: When binding constraints emerge during severe recessions, can a more integrated fiscal-monetary approach produce better macroeconomic outcomes than a strict separation of policy roles?"
    },
    {
      "heading": "Methodology and Evidence",
      "content": "- Model: Simulations of an open economy DSGE model calibrated to emerging and advanced economies.\n- Complementary evidence: Case study evidence (nature and scope described in the paper).\n- Scenarios considered: Severe recessions with binding constraints that limit standard monetary or fiscal instruments."
    },
    {
      "heading": "Key Findings",
      "content": "- Integrated policy approach:\n  - When constraints are binding, a more integrated approach to fiscal and monetary policy can lead to a better policy mix.\n  - Under certain circumstances, this integrated approach can deliver better macroeconomic outcomes.\n- Risks and caveats:\n  - The integrated approach entails risks to institutional credibility.\n  - Effective application requires clear assessment of each country’s circumstances and safeguards to protect the credibility of the existing institutional framework."
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- Assess country-specific constraints and institutional settings before adopting integrated policy responses.\n- Design and implement safeguards to preserve the credibility of existing monetary and fiscal institutions when coordination is intensified.\n- Use integrated policy only under circumstances where model simulations and case evidence indicate net macroeconomic benefits, recognizing attendant risks."
    },
    {
      "heading": "Subject and Keywords (as listed)",
      "content": "- Subject: Fiscal policy, Fiscal stimulus, Inflation, Inflation targeting, Monetary policy, Prices, Public debt\n- Keywords: Africa, Fiscal stimulus, Global, government spending hike, hike in liquidity trap, Inflation, Inflation targeting, monetary policy rate, open economy, rate in Botswana, recession scenario\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/09/02/effective-fiscal-monetary-interactions-in-severe-recessions-522755"
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    "Authors: Jiaqian Chen, Raphael A Espinoza, Carlos Goncalves, Tryggvi Gudmundsson, Martina Hengge, Zoltan Jakab, Jesper Lindé",
    "Published: September 2, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400218880.001",
    "Publication: IMF Working Papers",
    "Title: \"Effective Fiscal-Monetary Interactions in Severe Recessions\"",
    "Authors: Jiaqian Chen, Raphael A Espinoza, Carlos Goncalves, Tryggvi Gudmundsson, Martina Hengge, Zoltan Jakab, Jesper Lindé",
    "Date: September 2, 2022",
    "Core question: When binding constraints emerge during severe recessions, can a more integrated fiscal-monetary approach produce better macroeconomic outcomes than a strict separation of policy roles?",
    "Model: Simulations of an open economy DSGE model calibrated to emerging and advanced economies.",
    "Complementary evidence: Case study evidence (nature and scope described in the paper).",
    "Scenarios considered: Severe recessions with binding constraints that limit standard monetary or fiscal instruments.",
    "Integrated policy approach:",
    "Risks and caveats:",
    "Assess country-specific constraints and institutional settings before adopting integrated policy responses.",
    "Design and implement safeguards to preserve the credibility of existing monetary and fiscal institutions when coordination is intensified.",
    "Use integrated policy only under circumstances where model simulations and case evidence indicate net macroeconomic benefits, recognizing attendant risks.",
    "Subject: Fiscal policy, Fiscal stimulus, Inflation, Inflation targeting, Monetary policy, Prices, Public debt",
    "Keywords: Africa, Fiscal stimulus, Global, government spending hike, hike in liquidity trap, Inflation, Inflation targeting, monetary policy rate, open economy, rate in Botswana, recession scenario",
    "**Working Paper**"
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