The Impacts of Monetary and Fiscal Policies on Economic Growth in Vietnam

Macroeconomic policies play an important role in stabilizing prices and sup-porting economic growth, especially during times of crisis. There is no defini-tive answer to the question of which monetary or fiscal policy is most appro-priate in a given context. Effective crisis prevention requires a well-thought-out plan of government actions to respond to such events. By studying the impact of both monetary and fiscal policies on economic growth, policymak-ers could obtain valuable insights to inform their responses to future crises. This article analyzes the impacts of monetary and fiscal policies on the eco-nomic growth of Vietnam, covering the period from 1996 to 2021. We utilizes empirical methods of regression analysis, including Ordinary Least Squares (OLS) estimation on a simple specified regression model and Vector Auto-regression (VAR). The results show that fiscal policy, as measured by public consumption expenditure, has a stronger impact on economic growth com-pared to monetary policy represented by broad money. The case of Vietnam has demonstrated the more appropriateness of government spending expan-sion as a policy towards a small open economy, particularly in the current context. However, it is important to acknowledge that spending has its limita-tions, especially in light of Vietnam's relatively high public debt. The govern-ment needs to carefully plan and implement public spending measures to ensure efficiency and instill confidence in a promising future for all economic sectors in Vietnam, thereby mitigating the effects of the current crisis period