Research on the Coordination Mechanism of Fiscal and Monetary Regulation

Zekai Feng

doi:10.62051/ijgem.v4n2.03

Authors

Zekai Feng

DOI:

https://doi.org/10.62051/ijgem.v4n2.03

Keywords:

Fiscal policy, Monetary policy, Policy coordination, Macroeconomic management, Policy framework

Abstract

This article deeply explores the coordination and cooperation mechanism between fiscal policy and monetary policy in modern economic management. From a painstaking analysis of local and foreign practices and theoretical frameworks of policy, one can see that in a complex economic environment, the effect of a single policy tool is often hard to achieve. Then, the effective coordination between fiscal and monetary policies becomes particularly important. Therefore, this paper first sorted out the basic theories of fiscal policy and monetary policy before going into the analysis of how the two policies are related to each other and how synergy is necessary during different economic cycles. It has been pointed out by the study that what accomplishes the policy coordination is division of functions and cooperation between the government and the central bank; that is to say, it is an institutional and informational mechanism problem in which both clear policy frameworks and information sharing mechanisms are supposed to be set up to ensure good implementation. Finally, specific recommendations on the paths to optimal coordination between fiscal and monetary policies lie in institutional design, improvement of transparency in policy conduct, and strengthening of cross-sectoral cooperation in view of economic stability and sustainable growth.

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