Monetary and Fiscal Policy Linkages in the Czech Republic
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Monetary and Fiscal Policy Linkages in the Czech Republic
By
Lukas Boer
Allan Dizioli
April 23, 2026
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Format: Chicago
Lukas Boer, and Allan Dizioli. "Monetary and Fiscal Policy Linkages in the Czech Republic",
Selected Issues Papers
2026, 035 (2026), accessed 4/24/2026,
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Summary
This paper uses scenario analysis to illustrate the implications of persistently higher fiscal deficits for monetary policy in the Czech Republic. It distinguishes across different types of fiscal spending and monetary policy responses. The paper argues that coordinated action, explicitly accounting for the monetary policy response to a fiscal easing, can improve policy outcomes. The analysis is complemented by a historical perspective of fiscal and monetary policy interactions in the Czech Republic. Specifically, the paper reviews past policy synchronization, estimates the responsiveness of fiscal policy to debt levels, and constructs a measure of monetary-fiscal policy tensions based on fiscal r*. Intensifying tensions over the coming years point to a potential need for policy adjustments.
Subject
Central bank policy rate
Expenditure
Financial services
Fiscal policy
Fiscal stance
Government debt management
Inflation
Prices
Public debt
Public financial management (PFM)
Keywords
Central bank policy rate,
Czech Republic,
Fiscal Policy,
Fiscal stance,
Government debt management,
Inflation,
Monetary Policy,
Policy Coordination,
Scenario Analysis
Pages
16
Volume
2026
DOI
Issue
035
Series
Selected Issues Paper No. 2026/035
Stock No
SIPEA2026035
ISBN
9798229045087
ISSN
2958-7875
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