Coordination of Monetary and Fiscal Policies

Monetary and fiscal policies are two main policies which play an important role in the changes of economic activities. Monetary policy is applied by a central bank or monetary authority while fiscal policy is set by the government. There are various targets of monetary and fiscal policies which acceptances in practice. Targets of monetary policy are price stability, lower inflation, full employment, economic growth, stability of interest rates and balance of payments. Targets of fiscal policy full employment, economic stability, economic growth and effective source allocation. So, those policies must be applied coherent with macroeconomic targets by monetary and fiscal authorities. That situation required coordination of monetary and fiscal policies. That issue especially for Turkish economy is very important. Because our country often come face to face with crises. To avoid these crises and also other crises which affect us in the world, monetary and fiscal policies should be applied in accordance by monetary and fiscal authorities. In this paper which studies process of coordination of monetary and fiscal policies in frame of approaches which directed to monetary and fiscal policies.