How are monetary and fiscal policy, the main macroeconomic tools used to steer our economies, able to address the unprecedented challenges presented by the events of recent years, such as Covid-19, the war on Ukraine, or the marked increase in energy prices? How do these policies of governments and central banks interact? In Talking Economics, Katarína Stehlíková and Jaroslav Borovička give us a macroeconomic look at the current economy and what it means for the future.
“One good thing to remember about both monetary and fiscal policy is that both are long-term games. When the central bank applies a policy, it builds reputation. Reputation is important for a stable environment and credible policies. The same thing is true about fiscal policy. Stable environment on the fiscal side is equally important for investments decisions, for example, in regards to the energy crisis. So, don’t get lost in the day to day changes and think about the long-term outlook,” says Jaroslav.
Jaroslav Borovička is a CERGE-EI MA in Economics alumnus. He completed his Ph. D. at the University of Chicago and works as an Associate Professor at the Department of Economics, New York University in the United States.