INSTITUTIONAL PROBLEMS REGARDING THE INTERACTION BETWEEN MONETARY AND FISCAL POLICY IN THE CONTEXT OF TARGETING INFLATION

Abstract

In this work, the nature of the mutual influence of monetary and fiscal policy on one of the key problems of the macroeconomic equilibrium of the economy of the Republic of Armenia and the accuracy of forecasting in the context of the application of policies targeting inflation is investigated. The problem of coordination between the two main macroeconomic pillars of economic policy is studied in the context of behavioral and institutional interactions between the Government and the Central Bank of the Republic of Armenia, which implies mutual adaptation and flexibility of reactions within certain rules of the game. Within the framework of the methodology developed in the article, the mutual influence of monetary and fiscal policy is studied using Markov transition models, taking the ratio of tax revenues to GDP and the interest rate on loans issued in the national currency in the Republic of Armenia as a basis.