IMPORTANCE OF COORDINATION OF THE MONETARY AND FISCAL POLICIES MEASURES

Summary: Coordination of monetary and fiscal policies remains a prerequisite for a successful functioning of an economy. The absence of coordination between monetary and fiscal authorities leads towards a poor overall economic performance. Inadequately defined policy within one field weighs a burden on the policymakers in the other policy area, and in a long-term perspective becomes unsustainable. Necessary precondition for an efficient coordination between the monetary and fiscal policies is the required presence of a sustainable course of both the former and of the latter policy, because even if the policymakers have closely coordinated their policies, once they turn out to be unsustainable, macro-economic instability will ensue.