The Fiscal Channel of Unconventional Monetary Policy: Inside the Black Box

The aim of this article is to clarify the meaning and functioning of the ‘fiscal channel' of unconventional monetary policies. New Keynesians present it as a key transmission channel of unconventional monetary policies. However, this channel is generally not analysed in depth, so that it remains a ‘black box', with a need to investigate inside. For this purpose, we build a database of articles mentioning the term ‘fiscal channel', with 82 documents between 2002 and 2024. This review leads us to distinguish between two approaches for understanding the fiscal channel: a ‘monetary' approach and an ‘interest rate’ approach. For each of these two approaches, we contrast the theories of the New Keynesians with the post-Keynesians alternatives. We show that, although there are points of convergence among these schools of thought regarding the analysis of the fiscal channel, there are numerous and significant points of divergence. In light of these limitations of the fiscal channel highlighted by the post-Keynesians, we conclude on a critical appraisal of the importance of the New Keynesian view of the fiscal channel.