Tag Archives: Fiscal monetary policy interaction

“Wenn die Notenbank den Staat finanziert (When the Central Bank Finances the State),” FAS, 2020

FAS, 31 May 2020. PDF.

Monetary deficit financing is the norm—after all, central banks distribute their profits. Monetary financing occurs in the context of regular open market operations and QE and, hyper charged, with helicopter drops. The question is not whether monetary policy should finance the government, but why it does so, and to what extent. Fiscal and monetary policy are inherently connected; what constitutes monetary policy is defined by objectives.