The effect of expansionary fiscal policies on interest rates has changed sign

An expansionary fiscal policy traditionally led to a rise in short-term interest rates (as the central bank reacted to the stimulation of demand) and also in long-term interest rates (as a result of the central bank's policy and crowding-out effects). But nowadays, the effect of an expansionary fiscal policy on interest rates has changed: it has become negative. This illustrates the changing nature of the relationship between fiscal and monetary policy. There has been a shift: From monetary policy dominance, which "punished" fiscal deficits by raising interest rates; To fiscal policy dominance ("fiscal dominance") which forces central banks to maintain governments' fiscal solvency despite their expansionary fiscal policies .