Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025)

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The Interplay Between Fiscal and Monetary Policy: Implications for Economic Stability

Authors
Zhicheng Wang1, *
1Northeastern University, Boston, MA, 02115, USA
*Corresponding author. Email: zchwang@ucdavis.edu
Corresponding Author
Zhicheng Wang
Available Online 3 July 2025.
DOI
10.2991/978-94-6463-748-9_89How to use a DOI?
Keywords
Fiscal and Monetary Policy; Economic Stability; Implications
Abstract

Fiscal and monetary policy interactions are crucial for macroeconomic stability, particularly during crises. While fiscal policy influences aggregate demand through government spending and taxation, monetary policy controls inflation and economic activity via interest rate adjustments. Using econometric models, such as VAR and DSGE, this study examines the dynamic interplay between these policies, emphasizing temporal effects and alignment. Empirical evidence highlights that coordinated fiscal and monetary policies, such as during the 2008 financial crisis and COVID-19 pandemic, amplify economic outcomes but pose challenges like debt sustainability and inflation control. The findings suggest that policy alignment enhances GDP growth and minimizes inefficiencies, while misalignment exacerbates economic instability. Future research should explore nonlinear policy effects, cross-country comparisons, and the impact of technological advancements. The study underscores the importance of transparent frameworks and advanced analytics to optimize fiscal-monetary policy coordination. And to use different models and data sources to give a more detailed analysis of how this cross-section policy will affect the real-world economy.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
3 July 2025
ISBN
978-94-6463-748-9
ISSN
2352-5428
DOI
10.2991/978-94-6463-748-9_89How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Zhicheng Wang
PY  - 2025
DA  - 2025/07/03
TI  - The Interplay Between Fiscal and Monetary Policy: Implications for Economic Stability
BT  - Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025)
PB  - Atlantis Press
SP  - 809
EP  - 815
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-748-9_89
DO  - 10.2991/978-94-6463-748-9_89
ID  - Wang2025
ER  -