Andre Chelhot

Andre Chelhot

Monetary Policy in Times of Fiscal Dominance

From the Taylor Rule to the Chelhot Rule

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Andre Chelhot
Aug 11, 2025
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Monetary Policy in Times of Fiscal Dominance

In a world where fiscal dominance takes hold, the objectives and instruments of monetary policy inevitably shift. Under “normal” circumstances, modern central banks often follow a policy framework similar to the Taylor Rule, adjusting the nominal policy rate in response to deviations of inflation from target a…

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