Which approach is more effective in fighting economic crises: expansionary fiscal policy or stringent monetary policy?

Dear Researchers, Scientists, Friends,

In the face of economic crises, governments and central banks are faced with the choice of appropriate tools to stimulate the economy. Expansionary fiscal policy involves increasing public spending and lowering taxes, while a tight monetary policy focuses on controlling the money supply and raising interest rates to combat inflation. For the purposes of this discussion, I have formulated the following research thesis: expansionary fiscal policy can lead to a faster economic recovery by increasing demand, but at the same time it can increase the budget deficit and public debt. On the other hand, a strict monetary policy can effectively control inflation, but it can also slow down economic growth and lead to higher unemployment. Therefore, the analysis of the effectiveness of both approaches requires taking into account the economic context, including the level of inflation, unemployment and the state of public finances. It is important to understand that fiscal and monetary policies are interrelated and their inconsistency can lead to undesirable effects. An example would be a situation where expansionary fiscal policy is pursued simultaneously with restrictive monetary policy, which can undermine the effectiveness of both measures. Furthermore, the reactions of the financial markets to such measures can be unpredictable, which further complicates the assessment of the effectiveness of individual policies.

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I have described the key issues of anti-crisis state intervention in my article below:

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I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

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And what do you think about this?

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I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz