Assessing the relative impact of flscal and monetary policies on economic growth

Abstract

    Monetary and fiscal policies are used as major tools for macroeconomic management. The relativeeffectiveness of the two policies has been a major debate both empirically and theoretically.This paper tries to investigate the relative effectiveness of fiscal and monetary policies withrespect to Vietnam 's GDP growth during 2001-2014 based on a recursive vector autoregressiveapproach. Based on analysing impulse responses and variance decomposition, the results showthat in the period 2001-2014 monetary policy was relatively more effective than fiscal policy instimulating the real output.