The article explores how monetary and fiscal policies interact during a financial crisis using a mathematical model. By adjusting how central banks set interest rates and how governments spend money, the study shows that a combination of expansionary monetary policy and austerity-oriented fiscal policy can help stabilize economies. The research suggests that modifying the rules for monetary policy can reduce the impact of financial crises on the real economy. In a monetary union, stabilizing output in one country becomes more challenging, leading to deflation in one country and inflation in another.