Fiscal and Monetary Policy

2019 ◽  
pp. 64-82
Author(s):  
Romar Correa
Keyword(s):  
Monetary Policy ◽  
Monetary Authority ◽  
Stock Flow ◽  
Fiscal And Monetary Policy ◽  
Fiscal Authority

Romar Correa continues to use the Godley-Cripps (1983) stock-flow-consistent (SFC) framework in this update to refine the thesis that the monetary authority is the ‘handmaiden’ of the fiscal authority. The bank, commercial and central being indistinguishable, is central to the account. A revitalized ‘real bills doctrine’ is proposed. The deleterious consequences of promoting the alternative, ‘financialization’ are traced.

scholarly journals Macroeconomic Implications of US Sanctions on Iran: A Sectoral Financial Balances Analysis

2019 ◽  
Vol 14 (3) ◽  
pp. 182-204
Author(s):  
Sivramkrishna Sashi ◽  
Sharma Bhavish
Keyword(s):  
Monetary Policy ◽  
Oil And Gas ◽  
Asset Accumulation ◽  
Fiscal Deficits ◽  
The Us ◽  
Macroeconomic Implications ◽  
Stock Flow ◽  
The Impact ◽  
Fiscal And Monetary Policy ◽  
Flow Consistency

AbstractIran is facing a severe macroeconomics crisis after the US (re)imposed sanctions on its oil and gas exports in May 2018, followed by additional sanctions on metal exports in 2019. Its exports have collapsed triggering a contraction of the economy along with accelerating inflation and depreciating currency. Using the sectoral financial balances (SFB) model, we study the interrelationship between several macroeconomic parameters maintaining stock-flow consistency across time and sectors of the economy. Fiscal and monetary policy cannot reverse the consequences of the sanctions although fiscal deficits as a percentage of GDP will see a rise to accommodate the domestic private sector’s desire to accumulate financial asset accumulation. The lack of a strong monetary policy mechanism in Iran may, however, be unable to quell the impact of expansionary fiscal policy on inflation and depreciating rial. Given the limited macroeconomic policy options open to Iran in dealing with the crisis Iran, the only option may be political – a return to the negotiating table with the US.

scholarly journals Some Unpleasant Monetarist Arithmetic

2017 ◽  
Author(s):  
Neil Wallace
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Simple Model ◽  
Inflation Rate ◽  
Monetary Authority ◽  
Fiscal Policies ◽  
The Future ◽  
Indefinite Future ◽  
Rates Of Growth ◽  
Fiscal Authority

This chapter is a variation on the theme that monetary and fiscal policies are interrelated and must necessarily be coordinated. The issue of coordination arises when one wants to know whether it is possible for monetary policy permanently to influence an economy's inflation rate. One can imagine a monetary authority sufficiently powerful vis-à-vis the fiscal authority that by the imposition of slower rates of growth of base money, both now and into the indefinite future, it can successfully constrain fiscal policy by telling the fiscal authority how much seigniorage it can expect now and in the future. In this setting, monetary and fiscal policies are coordinated by having the monetary authority discipline the fiscal authority. The chapter first describes a simple model that embodies unadulterated monetarism before discussing the Cagan-Bresciani-Turroni effect.

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