THE DEVELOPMENT EFFECTS OF THE MONETARY AND FISCAL POLICY IN CONTEMPORARY CONDITIONS

Abstract

One of the biggest problems in economic theory has always been coordination of different elements of economic policy, especially monetary and fiscal policy. In the past, there have been a few theories emphasizing one of them, but in contemporary conditions it is a fact that the only right answer is in coordinated conducting of all of them. Therefore, every measure in monetary policy has to be followed by particular action in fiscal policy and the other way around. The question remains whether fiscal or monetary policy should have the priority in decision making and is there a pattern to follow when it comes to creating economic policy. Empirical data are the most purposeful source for answering these questions, and therefore we will use variables from four different countries from the last fifteen years and try to find the connection between monetary and fiscal policy and the standard of living.