EXPANSIVENESS AND RESTRICTIVENESS OF MONETARY AND FISCAL POLICY IN THE EUROZONE IN THE CONTEXT OF THEIR COORDINATION

The originality of the analysis presented in this article is to emphasize the importance of proper conduct of monetary and fiscal policy and their significance in economic processes in the selected countries of the euro area. The aim of the article is to indicate periods of restrictive and expansionary monetary, fiscal and economic policy in the euro area in the context of policymix coordination. In the literature on the subject, research on equilibrium in the fiscal and monetary game was conducted, taking into account the priorities of the central bank and the government. Therefore, assuming that the central bank aims to minimize inflation and the government tries to maximize economic growth depending, among other things, on the budget deficit, it was shown in the literature that economic authorities according to the dominant strategies may choose restrictive monetary and expansionary fiscal policies (and vice versa) or both restrictive policies. Hence, this study highlights the context of monetary and fiscal game in relation to the direction (restrictiveness or expansiveness) of both policies. The study covered the years 1999-2017. To achieve the article's objective the following research methods were used: presentation of statistical data and the presentation of the methodology behind the classification of the periods (restrictive/expansionary) and discussion of the results. We note that the character of monetary and fiscal policy plays a significant role in the economies. In the studied period, it was rather the fiscal policy that was the dominant option of economic policy. We note that during the economic slowdown (2001-2002), the financial crisis (2008-2009) and as a consequence - the crisis of public finances in the euro area (2010-2011) dominated the expansionary fiscal policy against the restrictive monetary policy. In turn, in the years 2015-2017, the expansionary monetary policy dominated against the restrictive fiscal policy, which could have a positive impact on GDP growth.