FISCAL AND MONETARY POLICY

Fiscal and Monetary Policy

Fiscal and Monetary Policy

Introduction

Monetary policy consists of deliberate actions of the monetary authorities of a country (Central Bank more or less independent governments) on the money in circulation, financial assets (sale or purchase of Treasury, operations known as open market), the credit policy (via setting interest rates) and possibly on the exchange rate policy, with the aim of regulating the economy at the service of the minimum and maximum inflation activity (growth).

Discussion

In the late 1970s, in line with the economic theory monetarist (Friedman), control of the money supply was the main instrument of monetary policy ...