The Efficiency of Monetary and Fiscal Policy based on IS-MP-AS model during Financial and Eurozone Crisis

Abstract

This dissertation observes efficiency of monetary and fiscal policy in the Czech Republic, the United Kingdom and Euro Area based on an extended IS-MP-AS model. Empirical results show effective fiscal policy with positive relationship between GDP and government debt/GDP ratio, which support Keynesian theory of increasing government spending. On the other hand monetary policy shows ineffective or inconclusive monetary policy, it could be caused by the global financial and Eurozone debt crisis which effect data rapidly.