Monetary and Fiscal Policy

This article attempts to assess to what extent the central bank or the government should respond to developments that can cause financial instability, such as housing or asset bubbles, overextended budgetary policies or excessive public and household debt. To analyse this question, we set up a simple reduced-form model in which monetary and fiscal policy interact, and imbalances (bubbles) can occur in the medium-run. Considering several scenarios with both benevolent and idiosyncratic policy-makers, the analysis shows that the answer depends on a number of characteristics of the economy, as well as on the monetary and fiscal policy preferences with respect to inflation and output stabilisation. We show that socially optimal financial instability prevention should be carried out by: (i) both monetary and fiscal policy (sharing region) under some circumstances; and (ii) fiscal policy only (specialisation region) under others. There is, however, a moral hazard problem: both policy-makers have an incentive to be insufficiently pro-active in safeguarding financial stability and shift the responsibility to the other policy. Specifically, under a range of circumstances, we obtain a situation in which neither policy mitigates instability threats (indifference region). These results can be related to the build-up of the current global financial crisis, and have strong implications for the optimal design of the delegation process.

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The book presents a theory of necessity to adjust money supply to account for productivity if deflation is to be avoided. The monetary agent (central banker) is a market participant who is not profit oriented and can create money at will, and thus not be subject to rational investor constraints. The monetary agent's power is similar to or greater than investor power in the market. Businesses leverage low interest rates enforced by the monetary agent to increase their activity, and growth rates, increasing employment to compensate for the reduced labor necessary to create the former level of goods and services. This leveraged difference in returns is the equity premium. Since productivity is a "rate" of production, even a one time increase requires a corresponding permanent increase not in the money supply itself, but in the "rate of increase" of the money supply. Given the steady growth in productivity of the last 100 years, the world economy is now grossly under-stimulated and in danger of precipitous deflation.

Both academic models and arguments based on historical events are presented, along with analysis of the meaning of money, investor behavior, and practical techniques for obtaining the equity premium in one's portfolio.

This paper develops a DSGE model for an open economy and estimates it on euro area data using Bayesian estimation techniques. The model features nominal and real frictions, as well as financial frictions in the form of liquidity-constrained households. The model incorporates active monetary and fiscal policy rules (for government consumption, investment, transfers and wage taxes) and can be used to analyse the effectiveness of stabilisation policies. To capture the unit root character of macroeconomic time series we allow for a stochastic trend in TFP, but instead of filtering data prior to estimation, we estimate the model in growth rates and stationary nominal ratios.

This paper develops a DSGE model for an open economy and estimates it on euro area data using Bayesian estimation techniques. The model features nominal and real frictions, as well as financial frictions in the form of liquidity constrained households. The model incorporates active monetary and fiscal policy rules (for government consumption, investment, transfers and wage taxes) and can be used to analyse the effectiveness of stabilisation policies. To capture the unit root character of macroeconomic time-series we allow for stochastic trend in TFP, but instead of filtering data prior to estimation, we estimate the model in growth rates and stationary nominal ratios.

Both monetary and fiscal policies are employed across the globe particularly in small-open economies like Nigeria to guide the economy towards the path of sustainable growth, ensure stable price and further creates a conductive atmosphere for domestic and foreign investment. In lieu of that, this study examines the monetary and fiscal policy of the Nigerian economy over the period of 1980 to 2017 using annual time series data as well as evaluates the growing trend in critical indicators with the view to determining the existence of possible relationship. Using the OLS technique and the cointegration test, results indicate that both monetary and fiscal policy have positive and significant impact on economic growth. In addition, further result shows that monetary policy is more effective in Nigeria than fiscal policy for the period under consideration. As such, there is need to impose fiscal discipline in the public finance since monetary policy cannot attain the desired goal given the existence of fiscal imbalances. The public sector should safeguard the maintenance of a steady macroeconomic environment which ensure that monetary aggregates are operating within the growth limits.

This study examined the impact of monetary policy tools on the performance of deposit money banks in Nigeria. The study sought to evaluate the effect of money supply on the performance of Deposit Money Banks in Nigeria; the significant impact of monetary policy rate on Deposit Money Banks' Performance; to investigate the influence of Cash reserve ratio on Deposit Money Banks' Performance. The study is predicated on the Classical theory, Keynesian theory and Neo-Classical theory. The secondary data were obtained from the Central Bank of Nigeria Statistical Bulletin. The multiple regression analysis i.e. Ordinary least square(OLS) was used to test the impact of monetary policy tools on the performance of deposit money banks in Nigeria. The result shows that the monetary policy variables have positive relationship on performance of Nigerian Deposit Money Banks except Money Supply and Liquidity Ratio. The study concluded that monetary policy tools have no significant effect on the financial performance of commercial banks in Nigeria. The study then recommends that commercial banks should put more emphasis on the internal factors to financial performance. These internal factors include capital adequacy, asset quality, management efficiency, earnings ability and liquidity management.

With the aid of the St. Louis equation and the general method of moments (GMM) approach, this study investigates the relative effect of monetary and fiscal policy on economic development in Africa within the period 1995–2016. The study shows that money supply has significant positive relationship with GDP per capita while interest rate has significant negative effects. Government spending has significant negative relationship with GDP per capita while taxation has significant positive effects. Other macroeconomic variables such as primary enrollment and openness to trade have significant positive effects while inflation has negative effects. The environmental variable, carbon emissions, has significant negative effects. Among the institutional variables, corruption has significant negative effects. The results therefore support both Keynesian and monetarist positive policy assertions: Money supply, interest rate, government spending and taxation are viable instruments to stabilize output. However, this study shows that utilizing monetary policy and interest rate as policy tools is more powerful than using government spending and taxation. This is in line with the predictions of Milton Friedman and Schwartz (1963) and other advocates of the St. Louis equation. Therefore, in order to attain higher economic development, African economies should rely more on monetary policy as compared to fiscal policy.

... The second part describes how the crisis evolved, what defence was used by the central bank, and how the pegged regime was abandoned and replaced by the managed ¯oat. ... In addition, the central bank could use some other arrangements to borrow more foreign currency. ...

Potential output measures a country's attainable aggregate living standard and is thus one of the most important categories of economics. It is also a key indicator for monetary and fiscal policy. Despite its prominence, however, potential output is a difficult concept to pinpoint theoretically and even more so empirically. The study discusses these difficulties and also the marked revision of

El modelo keynesiano IS-LM es el más usado para realizar modelaciones empíricas que permitan evaluar los efectos a corto plazo sobre la economía de las políticas monetarias y fiscales. A lo largo de los últimos años, se ha planteado que las variables determinantes de la oferta agregada no están totalmente disociadas de la demanda agregada como se plantea en un modelo keynesiano típico; para probar esto, se recurre a un modelo de mínimos cuadrados en tres etapas para la economía mexicana de 1980 a 2004. Se pretende poner a prueba el modelo tradicional IS-LM modificado para una economía abierta, y analizar el carácter endógeno tanto de las variables que afectan a la balanza comercial, como de la política fiscal y monetaria.

The present paper highlights the imbalances that have characterized the Eurozone during the crisis. The contribution focuses on the issue of current account imbalances and the factors that caused them. It also examines the banking union as an important step toward a better management of the Eurozone financial imbalances. Furthermore, the paper discusses and assesses the policies, especially monetary policy,implemented in the Eurozone, stressing the limits of the strategy pursued by the European authorities. The main purpose of the paper is to point out possible solutions in order to correct the imbalances and discuss changes in Eurozone policies. The present paper highlights the imbalances that have characterized the Eurozone during its long crisis. Thecontribution focuses on the issue of current account imbalances andthe factors that caused them. It also examines the banking union as an important step toward a better management of the Eurozone financial imbalances.Furthermore, the paper discusses and assesses the policies, especially monetary policy, implemented in the Eurozone, stressing the limits of the strategy pursued by the European authorities.The main purpose of the paper is to point out possible solutions in order to correct the imbalances and discuss changes in Eurozone policies. The ultimate goal is to have a more balanced and integrated Eurozone which is able to pursue stability, less divergence and political credibility. 2.Policies, institutional flaws and the crisis in the Eurozone Before the crisis, the governance in the Eurozone was based on a fiscal policywhich remained at national level, although constrained by the Growth and Stability Pact. At the same time, national authorities were deprived of the exchange-rate instrument and national discretion over last resort lending for macroeconomic management. The ECB was and still is an independentEU official institution, in charge of handling the single currency and the monetary policy with the narrow remit of ensuring price stability 1. Consequently, monetary policy has resulted to be independent from fiscal policy.In addition, the ECB did not monitor the banking sector, since bank regulation and resolution, as well as the regulation of financial markets, were left to national governments. Although in the years before the crisis the increasing integration of Eurozone financial markets determined a growth in capital flows and banking − an increase that undermined the ability of some member states to backstop their national banking system −, there was no strategy in terms of harmonization of rules and surveillance of the financial sector in the EMU (Schilirò, 2017). The EMU lacked a developed surveillance framework to track and correct the imbalances in financial markets, sovereign debts, and competitiveness (European Commission, 2017). Thus, the stabilizers that existed at the national level prior to the start of EMU were stripped away from member states without being transposed at the monetary union level. This left the member states unable to deal with the coming national disturbances (De Grauwe, 2013). At the same time, financial deepening reached a certain level within the monetary union, due the concurrent progress of financial integration and financial sector growth, and it left the Eurozone facing a policy trilemma. 1 Article 127(1) of TFEU.

Despite positive, relatively broad-based and stable growth record in recent years and immense untapped potential in agriculture, mining and services, Zambia's poverty rates have not declined significantly and remain high. Income growth is limited by coordination failures such as poor access to domestic and international markets, inputs, extension services and information. High indirect costs -most of which attributable to infrastructure service-related inputs into production including energy, transport, telecom, water, but also insurance, marketing and professional service -undermine Zambia's competitiveness, limit job creation and therefore serve as a major constraint to pro-poor growth. Continued real appreciation is another serious threat to the competitiveness of export-oriented and import-competing sectors and to job creation. For Zambia to stay competitive and sustain the growth momentum it will be critical to improve productivityincluding the productivity of its labor force, and to lower indirect production costs related to basic services. Carefully crafted monetary and fiscal policies will also be critical in responding to the real appreciation pressures. Improving the quality and access to secondary and tertiary education is essential if the poor are to benefit from future growth of the non-farm economy. Weak governance and in particular poor government effectiveness and are factors behind the market coordination failures and the identified government failures, and are as such major obstacles to inclusive growth in Zambia.

I introduce distortionary taxes on consumption, labor and capital income into a New Keynesian model with Calvo pricing and nominal bonds. I study the relation between tax instruments and optimal monetary policy by computing simple rules for monetary and fiscal policy when one tax instrument at a time varies, while the other two are fixed at their steady-state level. The optimal rules maximize the second-order approximation to intertemporal utility. Three results emerge: (a) when prices are sticky, perfect inflation stabilization is optimal independently from the tax instrument adopted; (b) the optimal degree of responsiveness of monetary policy to output varies depending on which tax instrument induces fluctuations in the average tax rate; (c) when prices are flexible, fiscal rules that prescribe unexpected variations in the price level to support debt changes are always welfare-maximizing.

Potential output measures a country's attainable aggregate living standard and is thus one of the most important categories of economics. It is also a key indicator for monetary and fiscal policy. Despite its prominence, however, potential output is a difficult concept to pinpoint theoretically and even more so empirically. The study discusses these difficulties and also the marked revision of

This paper pursues a computationally intensive approach to generate future inflation, followed by an exploration of the determinants of inflation expectations by estimating a new Keynesian type Phillips curve that takes into account country-specific characteristics, the stance of monetary and fiscal policies, marginal costs and exogenous supply shocks. The empirical results indicate that high and climbing inflation could easily seep

Potential output measures a country's attainable aggregate living standard and is thus one of the most important categories of economics. It is also a key indicator for monetary and fiscal policy. Despite its prominence, however, potential output is a difficult concept to pinpoint both theoretically and even more so empirically. The article discusses the reasons for the marked revisions of

A B S T R A C T This paper provides evidence in support of the hypothesis that fiscal policy is largely anticipated and its effects depend on the extent to which policy is able to affect expectations. Based on a set of 2-country Bayesian VAR models between major European economies, we find that a surprise stimulus triggers expectations of deficit reversals that may crowd out private expenditure. An anticipated stimulus, on the contrary, is found to boost domestic activity in all samples. Moreover, it has positive cross-border effects in 50 percent of the cases. Overall, our findings suggest that fiscal policy is effective when it is not " crowded out " by expectations of reversals. We document such crowding out effects in Italy and France. Finally, we argue that predictability has important consequences for the design of discretionary policy.

La théorie budgétaire du niveau des prix distingue deux types de régimes pour les politiques économiques : Ricardien et Non-Ricardien. Nous analysons dans quelle mesure ces deux régimes peuvent s'appliquer à des sous-périodes dans l'histoire économique d'un pays. Le cas du Liban, passé de la prospérité à la guerre puis à la reconstruction, offre une application de cette théorie, et montre sa pertinence empirique.

This paper studies the design, effects and interactions of monetary and fiscal policies in the euro-area and between the euro-area and the non euro-area. To do so, a stylized three-country model of monetary and fiscal policy rules is constructed. It is analyzed how monetary and fiscal rules affect the adjustment dynamics in the individual euro-area countries, the aggregate euro-area and the US, which is used as a proxy of the non euro-area. Four aspects play an important role in the analysis: (i) the consequences of alternative monetary and fiscal policy rules, (ii) transatlantic spillovers and policy interactions, and the dynamics of the euro and euro-area current account, (iii) the consequences of asymmetries between euroarea countries -asymmetries in macroeconomic shocks, macroeconomic structures or policy preferences-, and between the euro-area and the US, (iv) the role of alternative degrees of backward and forward looking (expectations) in output and inflation.

This paper describes the development and the current state of debt management in the Czech Republic. The basic principles on which it was built during the1990s and the importance of the monetary and fiscal policy coordination in effective debt management implementation are discussed. The authors try to explain the main factors that are behind the substantial state debt increases in the course of several recent years and to discuss some of the topical issues connected to the debt management targets and procedures. The paper provides a basic description of the instruments used and the conceptual and institutional framework of the Czech Republic debt management system with a particular emphasis on the role of the central bank.

This paper investigates the importance of fiscal policy in providing macroeconomic stabilisation in a monetary union. We use a microfounded New Keynesian model of a monetary union which incorporates persistence in inflation and non-Ricardian consumers, and derive optimal simple rules for fiscal authorities. We find that fiscal policy can play an important role in reacting to inflation and , but that not much is lost if national fiscal policy is restricted to react only to national differences in inflation and output.

The study analyzes price level in Azerbaijan economy over the period of 2000-2007 by employing a specific approach. The paper concludes that price increases caused by a resource boom differs from the price increases generated by a non-booming economy. Thereby, inflation mainly caused by resource boom has its own specific features in terms of impact on economy and therefore requires specific policy response. Some policy recommendations related to monetary and fiscal policies are suggested for elimination of harmful effects of resource boom and for preventing high price level in Azerbaijani economy.

This work studies the interactions between income distribution and monetary and fiscal policies in terms of ensuing dynamics of macro variables (GDP growth, unemployment, etc.) on the grounds of an agent-based Keynesian model. The direct ancestor of this work is the "Keynes meeting Schumpeter" formalism presented in . To that model, we add a banking sector and a monetary authority setting interest rates and credit lending conditions. The model combines Keynesian mechanisms of demand generation, a "Schumpeterian" innovation-fueled process of growth and Minskian credit dynamics. The robustness of the model is checked against its capability to jointly account for a large set of empirical regularities both at the micro level and at the macro one. The model is able to catch salient features underlying the current as well as previous recessions, the impact of financial factors and the role in them of income distribution. We find that different income distribution regimes heavily affect macroeconomic performance: more unequal economies are exposed to more severe business cycles fluctuations, higher unemployment rates, and higher probability of crises. On the policy side, fiscal policies do not only dampen business cycles, reduce unemployment and the likelihood of experiencing a huge crisis. In some circumstances they also affect positively long-term growth. Further, the more income distribution is skewed toward profits, the greater the effects of fiscal policies. About monetary policy, we find a strong non-linearity in the way interest rates affect macroeconomic dynamics: in one "regime" with low rates, changes in interest rates are ineffective up to a threshold beyond which increasing the interest rate implies smaller output growth rates and larger output volatility, unemployment and likelihood of crises.

Most recent work deriving optimal monetary policy utilising New Neo-Classical Synthesis (NNCS) models abstract from the impact of monetary policy on the government's finances, by assuming that any change in the government's budget can be financed through lump sum taxes. In this paper, we assume that the government does not have access to such taxes to satisfy its intertemporal budget constraint in the face of shocks. We then consider optimal monetary and fiscal policies under discretion and commitment in the face of technology, preference and cost-push shocks. We confirm that the optimal precommitment policy implies a random walk in the steady-state level of debt. We also find that the time-inconsistency in the optimal precommitment policy is such that governments are tempted, given inflationary expectations, to utilise their monetary and fiscal instruments in the initial period to change the ultimate debt burden they need to service. We show that this temptation is only eliminated if following shocks, the new steady-state debt is equal to the original (efficient) debt level. This implies that under a discretionary policy the random walk result is overturned: debt will always be returned to this initial steady-state even although there is no explicit debt target in the government's objective function. Analytically and in a series of numerical simulations we show which instrument is used to stabilise the debt depends crucially on the degree of nominal inertia and the size of the debt-stock. We also show that the welfare consequences of introducing debt are negligible for precommitment policies, but can be significant for discretionary policy.

Currently, many monetary and fiscal policy measures are aimed at preventing the financial market meltdown that started in the US subprime sector and has spread world wide as a great recession. Although some slow recovery appears to be on the horizon, it is worthwhile exploring the fragility and potentially destabi- lizing feedbacks of advanced macroeconomies in the context of

Monetary policy in a developing country plays an important role in increasing the growth rate of the economy by influencing the cost and availability of credit, by controlling inflation and maintaining equilibrium of the balance of payments. The GDP growth rate of Bangladesh according to the year 2020 is 5.2%, due to the pandemic it’s fall down whereas in the year 2019 Bangladesh had the highest GDP growth rate of 8.15% which was due to the contribution of different components of monetary policy. The purpose of this paper is to identify the impact of significant components of monetary policy that determine the level of economy growth in Bangladesh. Along with that, through the trend analyses, the comparison will be presented also in between the normal situation and COVID-19 situation. Correlation, regression, test of hypothesis and trend analysis have been conducted in this paper using SPSS software to analyze data. Both the primary and secondary data have been used in this paper. Data have been generated from economic reviews, journals, expert opinions etc. It has been found that several tools of monetary policy are significantly influencing economic growth where most significant determinants are low variable reserve ratio, flow of broad money, inflation, interest rate, lending rate flexibility in rationing of credit and fixation of less margin requirement.

Keywords: Economic Growth, Monetary Policy, Inflation, Reserve Ratio, Lending Rate, Broad Money

Abstract: In the year 2008 and the first half of 2009, the world witnessed the unfolding and heavy repercussions of the global financial crisis. Being a small open, FDI-reliant and export-dependant economy, Vietnam has not been spared from this external shock. The global ...

From the literature review, it is particularly argued that failure to implement effective fiscal policy measures have greatly hampered economic growth and sound macroeconomic stability in most developing countries.  The prevailing economic climate indicates that growth has slowed down substantially in most developing economies especially in sub-Saharan Africa (SSA) region. The discussion on the fold is that economic turbulence and uncertainty persist despite implementing the famous Structural Adjustments Programmes (SAPs) in the early 1980s and 1990s. Many scholars still argue that developing economies have maintained a stable and positive rate of growth while significant challenges of high real interest rates, declining investment opportunities, and volatility in exchange rates and fiscal deficit remains key on the development agenda.
At the end of the 1990s, most developing economies saw a full span of macroeconomic and microeconomic measures in order to resolve structural rigidities. For obvious reasons the economic outlook of the late 1990s provided a greater opportunity for sustained economic growth in most developing economies. However, this was not the case as most of them experienced a balance of payment crisis, growing foreign debt, high interest high rates and increase in public expenditure which was caused by imprudent fiscal policies. Most governments undertook a combination of austerity measures such as cutting down of public expenditure, raising enough revenues and reducing the fiscal deficit so as to promote macroeconomic stability.
On the contrary, the fiscal austerity measures led to the prolonged suffering of the poor as poverty rose to seriously levels. Mostly important, poverty in most developing economies has remained on the rise despite possible interventions. It is not surprisingly to note that the incidence of both rural and urban poverty is sharp and widespread despite the implementation of stabilization and adjustments programmes in some of the developing countries. The poorly designed fiscal austerity measures have caused a long period of disproportionately suffering among the poor in many developing countries. Governments in developing countries should shift from the perception of being an obstacle but a catalyst of development through their action in sustaining fiscal stabilization and adjustment measures.

This paper tries to test the empirical implications of productivity and other aggregate supply variables over the aggregate demand on an IS-LM model with an open economy estimated by 3-stages least squares. The model attempts to analyze the endogenous character of the trade balance variables, as well as the monetary and fiscal policy short-term effects for the Mexican economy during

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.

This article attempts to assess to what extent the central bank or the government should respond to developments that can cause financial instability, such as housing or asset bubbles, overextended budgetary policies or excessive public and household debt. To analyse this question, we set up a simple reduced-form model in which monetary and fiscal policy interact, and imbalances (bubbles) can occur in the medium-run. Considering several scenarios with both benevolent and idiosyncratic policy-makers, the analysis shows that the answer depends on a number of characteristics of the economy, as well as on the monetary and fiscal policy preferences with respect to inflation and output stabilisation. We show that socially optimal financial instability prevention should be carried out by: (i) both monetary and fiscal policy (sharing region) under some circumstances; and (ii) fiscal policy only (specialisation region) under others. There is, however, a moral hazard problem: both policy-makers have an incentive to be insufficiently pro-active in safeguarding financial stability and shift the responsibility to the other policy. Specifically, under a range of circumstances, we obtain a situation in which neither policy mitigates instability threats (indifference region). These results can be related to the build-up of the current global financial crisis, and have strong implications for the optimal design of the delegation process.

CNMT (Classical Neoclassical Monetary Theory) has defined monetary policy and the role of Central Banks for the last one hundred years. This book argues that it is time to change. It proposes a NMT (New Monetary Theory) which argues that Central Banks should be responsible for the whole relation between money and economic growth. For monetary policy it means that in regular times Central Banks will continue being guided by CNMT and QE (Quantitative Easing) should not be used. But in major crises like 1930, 2008, and 2020, NMT should be the guide and QE should be used extensively. NMT proposes that Central Banks should become even more independent and responsible for the productive economy, while traditional governments remain responsible mainly for the social economy. NMT argues that in major crises fiscal policy should only be limited to support the social economy - that one which does not have survival productive characteristics. And that extended QE, which we call in here the Monetary Credit Bazooka (MCB), should be used to support the productive economy - the one capable to receive and repay long term preferential loans. NMT implies a major revolution both in Monetary Theory and in Monetary Policy, but it is required both to have fast and efficient responses in major economic crises, and to avoid the inefficiencies associated with government spending and the unnecessary long term burdens to the tax payers which always imply unjust economic transfers.

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.

This paper analyzes in detail the mechanisms behind fiscal stabilization policy and the role of policy commitment in a micro-founded New-Keynesian model of a two-country monetary union, which is hit by supply shocks. We also explore the determinants of the gains from fiscal stabilization. While monetary policy with identical union members is concerned with stabilizing the union-wide economy, fiscal policy aims at stabilizing inflation differences and the terms of trade. Besides exploring optimal policies, we also consider monetary and fiscal rules. We study these rules both under coordination and non-coordination by the fiscal authorities. D

We extend the fiscal theory of the price level (FTPL) by developing a two-country openeconomy model under flexible exchange rates, where overlapping generations of consumers supply labour to imperfectly competitive firms which change their prices infrequently. We show that the fiscal response required to support an active inflation-targeting monetary policy is greater when consumers have finite lives. Additionally, one monetary authority can abandon its active targeting of inflation to stabilise the debt of a fiscal authority, even if the policy makers operate in different countries. Finally, through simulations, we consider the impact of fiscal shocks on key macroeconomic variables.

This paper provides new findings that extend the literature by investigating the time to equilibrium for price changes to catch up with exchange rate and the contribution of non-parity fundamentals in exchange-rate dynamics in a trade-related multi-country framework. It reports new findings on exchange behaviour by expanding the parity variables to include other theory-suggested variables with high and low-frequency multi-country panel regression analysis, and Divisia Index Model. Our findings indicate that exchange rates are affected by growth rates, capital and balance-of-payment flows, fiscal, monetary and other fundamentals. This study also confirms that long-run PPP equilibrium for a group of Asia Pacific countries is five years. These key findings are robust across different time intervals.

This study focuses on those substantial changes that characterize the shift of Vietnam's macroeconomic structures and evolution of micro-structural interaction over an important period of 1991-2008. The results show that these events are completely distinct in terms of (i) Economic nature;(ii) Scale and depth of changes;(iii) Start and end results; and,(iv) Requirement for macroeconomic decisions. The study rejected a suspicion of similarity between the contagion of the Asian financial crisis in 1997-98 and economic ...

This paper sought to examine the influence of monetary and fiscal policies on real sector output in Nigeria for the period 1981 to 2019. Data for the study were obtained from the Central Bank of Nigeria statistical bulletin and the World Development Indictors. The study employed the Augmented Dicky-Fuller and Philip-Peron test for unit root, Johansen cointegration test, Bounds test for levels relationship, error correction model, and Granger causality test. Both the Johansen cointegration test and the Bounds test for levels relationship revealed evidence of long run equilibrium relationship, necessitating the estimation of the error correction model. Based on the error correction model, monetary policy variables (broad money supply and prime lending rate) and fiscal policy variables (government expenditure, oil revenue, and non-oil revenue) exerted the desired significant effect on real sector output (gross domestic product) in the short run. The error correction term (0.393) indicates that 39.3% of the short run disequilibrium in real sector output is corrected annually. However, both government expenditure and broad money supply exerted a negative effect on real sector output in the long run; while prime lending rate and both oil and non-oil revenue generated a positive effect. The Granger causality test revealed no causality between government expenditure and real sector output, but a two-way causality flows between broad money supply and real sector output. The paper recommended a sound monetary-fiscal coordination so as to generate the desired effect on the real sector of the economy.