A tighter fiscal policy will contract the economy, and hence it may be used in a booming economy to reduce inflationary pressure. A loose monetary policy, on the other hand, is used in a recessed economy to increase spending and hence raise income.

The choice between tighter fiscal policy and looser monetary policy depends on the economic context:

A balanced approach, combining targeted fiscal restraint with accommodative monetary measures, often works best for achieving economic stability.

Fiscal and monetary policies are demand management tools. It will not cure problems arising from supply constraints or excesses. Overenthusiastic use of these policies often cause more problems than they solve.

Dear Researchers, Scientists, Friends,

The question, "Is a more restrictive fiscal policy or a looser monetary policy a better solution for economic stability?" in the context of advancing globalization and international capital flows, remains extremely relevant and complex, and further in-depth analysis of this issue is absolutely necessary. From my research and observations to date, it is clear that there is no single answer to this question, and the optimal solution likely depends on the specific economic conditions of a given country and the global economic environment. The relevance of this question stems from the constant fluctuations in the global economy, unpredictable external shocks, and the complex interactions between fiscal and monetary policy in conditions of high capital mobility. In the future, it will be crucial to investigate how different configurations of fiscal and monetary policy affect financial stability, the level of public and private debt, and long-term economic growth in various economic models. New research areas could address the role of inflation expectations in the effectiveness of monetary policy in a globalized world, the impact of fiscal policy on systemic risk in the financial sector, and optimal strategies for coordinating fiscal and monetary policy at the international level. The determinants shaping the effectiveness of these policies are undoubtedly the level of public and private debt, the openness of the economy to capital flows, the structure of financial markets, the credibility of institutions, and global economic conditions. I would like to thank all researchers and scientists for their past contributions to this fundamental discussion. I am open to any scientific collaboration that could contribute to a better understanding of these complex relationships and the development of more effective economic stabilization strategies in a global world. I encourage the continuation of this important debate.

I invite you to discuss this issue and to engage in scientific cooperation,

Best wishes,

Dariusz Prokopowicz

The effectiveness of tighter fiscal policy versus looser monetary policy depends on the economic context—looser monetary policy is generally preferred during downturns to stimulate growth, while tighter fiscal policy may be needed to control inflation or reduce debt; ideally, a balanced, coordinated approach tailored to the situation yields the best results for stability.

Depends on the cause of instability. For demand shocks, looser monetary policy is quicker; for structural deficits, tighter fiscal policy ensures sustainability.