Abstract

This paper aims at comparing monetary  and fiscal policy in the eurozone and  Bulgaria in order to reveal key challenges  to these policies. The extractive nature of  the institutional framework of the European  Monetary Union results from the „hidden  guarantee“ (EU accession premium) and  existing institutions - fiscal rules. In Bulgaria,  the Currency board arrangement imposes  constraints on political institutions to conduct  expansionary monetary policy. Thus fiscal  discipline is of great importance for the  maintenance of current monetary regime.  In this respect monetary and fiscal policy  are above all inclusive. Current challenges  to monetary and fiscal policy in the  eurozone and Bulgaria are mostly due to the  institutional basis and its implementation.