Monetary Policy and Debt

Dear Colleagues,

The nexus between monetary policy and debt has emerged as one of the most pressing themes in macroeconomic research and policy debate. Over the past two decades, the global economy has experienced an extraordinary sequence of shocks—from the global financial crisis to the COVID-19 pandemic and, more recently, inflationary pressures and tightening cycles across advanced and emerging markets. In response, central banks and fiscal authorities have deployed unprecedented measures, pushing public and private debt to new highs while reshaping the boundaries of monetary policy.

This Special Issue brings together a collection of contributions that examine the evolving relationship between debt dynamics and the conduct, transmission, and effectiveness of monetary policy. The articles span a wide range of topics, including the implications of high public debt for central bank independence, the role of monetary policy in debt sustainability, the interaction between interest rates and financial stability, and the potential consequences of fiscal–monetary coordination.

At the heart of this Special Issue lies a core set of questions: How do elevated debt levels constrain or amplify the effects of monetary policy? Can central banks maintain price stability in an environment of fiscal dominance? What tools are most effective when traditional interest rate policy is limited by debt-related concerns? And how should monetary authorities navigate the trade-offs between inflation control, financial stability, and debt sustainability?

By addressing these questions, this volume aims to contribute to a more nuanced understanding of the complex and evolving macro-financial environment. The insights offered here are particularly relevant as policymakers around the world grapple with tightening financial conditions, elevated sovereign and corporate debt burdens, and growing calls for a rethinking of macroeconomic frameworks.

Dr. Marco Di Pietro
Guest Editor

Manuscript Submission Information

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• monetary policy
• debt
• macroeconomic models
• central banks