Abstract
This paper aims to analyse the interactive role of fiscal and monetary policies in promoting inclusive growth. In this attempt, we use a panel data of 51 developing countries for the period 1995-2017 and employ state-of-the-art panel data estimation methods. The paper concludes that expansionary fiscal and monetary policies both affect economic inclusiveness in the developing region. However, it is observed that high expenditures in developing countries, which lead to debt crises, not only directly affect economic inclusiveness but also reduce the effectiveness of monetary policy. Therefore, the governments in these countries may consider cutting their spending. Thus, an increase in the money supply with a low to median level of government expenditure is a favourable policy option.
Keyword(s)
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