The Resource Interactions Between Monetary and Fiscal Policy : How Monetary Conditions Affect Fiscal Consolidation, Rudiger Ahrend, Pietro Catte and Robert Price, (electronic resource)

Interactions Between Monetary and Fiscal Policy : How Monetary Conditions Affect Fiscal Consolidation, Rudiger Ahrend, Pietro Catte and Robert Price, (electronic resource)

Label
Interactions Between Monetary and Fiscal Policy : How Monetary Conditions Affect Fiscal Consolidation
Title
Interactions Between Monetary and Fiscal Policy
Title remainder
How Monetary Conditions Affect Fiscal Consolidation
Statement of responsibility
Rudiger Ahrend, Pietro Catte and Robert Price
Creator
Contributor
Subject
Language
eng
Summary
This paper assesses how and in what circumstances, fiscal consolidations are affected by monetary conditions, using data covering 24 OECD countries over the past 25 years, Focusing on fiscal consolidation "episodes", it is found that these tend to occur when large budget deficits threaten sustainability and usually when other macroeconomic indicators -- inflation, the exchange rate and unemployment -- suggest a "crisis" situation. After controlling for these factors, the paper finds strong econometric evidence that consolidation efforts are more likely to be pursued and to succeed if the monetary policy stance is eased in the initial stages of the episode, thus contributing to offsetting the contractionary impact of fiscal tightening. However, the link is far from mechanical and there are also counter-examples where monetary easing was followed by aborted consolidation efforts. Central bank independence explicitly precludes direct responses of monetary policy to fiscal actions. However, the paper also provides evidence that the indirect reaction of monetary policy and financial markets to fiscal consolidation may be influenced by the quality of fiscal adjustment, as short and long-term interest rates are more likely to fall during episodes characterised by greater reliance on current expenditure cuts. While this means that causality runs both ways, the paper provides evidence that, even after controlling for this proxy of fiscal adjustment quality, changes in monetary stance do affect the chances that a fiscal retrenchment plan will be successfully pursued
Member of
Cataloging source
FR-PaOEC
http://library.link/vocab/creatorName
Ahrend, Rudiger
Government publication
international or intergovernmental publication
Index
no index present
Literary form
non fiction
Nature of contents
dictionaries
http://library.link/vocab/relatedWorkOrContributorName
  • Catte, Pietro
  • Price, Robert
Series statement
OECD Economics Department Working Papers,
Series volume
no.521
http://library.link/vocab/subjectName
Economics
Label
Interactions Between Monetary and Fiscal Policy : How Monetary Conditions Affect Fiscal Consolidation, Rudiger Ahrend, Pietro Catte and Robert Price, (electronic resource)
Instantiates
Publication
Antecedent source
not applicable
Carrier category
online resource
Carrier category code
  • cr
Carrier MARC source
rdacarrier
Content category
text
Content type code
  • txt
Content type MARC source
rdacontent
Control code
762087402
Dimensions
21 x 30 cm
Extent
1 online resource 45 pages
File format
one file format
Form of item
online
Media category
computer
Media MARC source
rdamedia
Media type code
  • c
Other control number
10.1787/414663503428
Specific material designation
remote
System control number
(OCoLC)762087402
Label
Interactions Between Monetary and Fiscal Policy : How Monetary Conditions Affect Fiscal Consolidation, Rudiger Ahrend, Pietro Catte and Robert Price, (electronic resource)
Publication
Antecedent source
not applicable
Carrier category
online resource
Carrier category code
  • cr
Carrier MARC source
rdacarrier
Content category
text
Content type code
  • txt
Content type MARC source
rdacontent
Control code
762087402
Dimensions
21 x 30 cm
Extent
1 online resource 45 pages
File format
one file format
Form of item
online
Media category
computer
Media MARC source
rdamedia
Media type code
  • c
Other control number
10.1787/414663503428
Specific material designation
remote
System control number
(OCoLC)762087402

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