Central bank and government: Who is the leader?

If the central bank is the leader, it announces its interest rate policy while knowing the government’s reaction. The government then has to ensure its fiscal solvency given the central bank’s interest rates policy. If the central bank believes that the fiscal deficit and the public debt are too high, it announces a rate hike that forces the government to switch to a more restrictive fiscal policy. This equilibrium prevailed until the 2008 crisis. If the government is the leader, it chooses the fiscal policy that it wants to conduct without tak ing into account the fiscal solvency constraint.  It is then the central bank that ensures fiscal solvency by conducting a very expansionary monetary policy if necessary , by taking the fiscal policy as given . It is this equilibrium of fiscal dominance that has appeared since the 2008 crisis. The shift to an equilibrium where the government is the leader is probably due to the fact that since the 2008 crisis, central banks have considered that a public debt crisis would be so serious that they would not take the risk of such a crisis happen ing .