Chapter 6 Monetary, Macroprudential and Fiscal Policy Júlia Király, B.Cs., L.J. and Katalin Mérő Abstract The chapter provides an overview of the conduct of fiscal, monetary and macroprudential policies in the Emerging European Economies since the Global Financial Crisis, including the policy response to Covid-19 and the post-pandemic challenges. We show that changes in the institutional frameworks both at the re- gional and national level led to a significant expansion of the instruments available for policymakers, as well as enhanced fiscal frameworks and resilience in the finan- cial sector. At the same time, monetary policy was constrained by several factors, including the global financial cycle, the structural decline in interest rates and the globalization of inflation. The large policy accommodation in response to Covid-19, including through the use of unconventional tools, helped mitigate the economic damage. The post-pandemic challenges, however, are significant, given the limited policy space, some structural factors affecting inflation and interest rates, as well as potential threats to independent institutions. Júlia Király B International Business School, Budapest, e-mail:
[email protected] Pending on employer’s authorisation Pending on employer’s authorisation Katalin Mérő Budapest Business School, Budapest, e-mail:
[email protected] 1 2 Király et al. 6.1 Introduction Over the past decade, the conduct of macroeconomic policies in the Emerging European Economies (EEE) has been influenced by several factors, including the reform of both the national and regional institutional frameworks, significant shifts in the global economic landscape, as well as the need to respond to the major challenges arising from the Global Financial Crisis (GFC), the European sovereign debt crisis and the Covid-19 pandemic.