Files

Abstract

The paper asks whether the financial crisis is upsetting the struggle for dominance between monetary and fiscal policy. It argues that a crisis is indeed a key moment when challenges to monetary policy dominance are greatest. However, the need to bail out financial institutions blurs the distinction between monetary and fiscal policy. The subsequent shift to public debt stress further weighs on central banks. The paper also discusses the situation when the interest rate hits the zero lower bound.

Details

PDF