Evaluating the coordination between monetary and fiscal policy

Abstract

    The coordination between monetary policy and fiscal policy is always a concerned topic due to their direct effects on economic growth and iriflation control. That is why it is ordinarily discussed in terms of spurring economic growth and controlling iriflation targeting in Vietnam. This paper also explains that sometimes there is no coordination between two these polices, to the extent of rapid changes of each policy in order to catch up macroeconomic targets, and hence causes an increase of inflation. In addition, the paper indicates that there is not a complete coordination of two these policies to encourage development of Vietnam financial market. Finally, the paper suggests that when the economic growth relies on the contribution of capital, the flexible adjustment and leader-follower based coordination of two policies spur economic growth and do not put pressure on inflation