The effects of the Taliban returning to Afghanistan and its effects on the monetary and fiscal policies of the country.

This paper speaks about the effects of the Taliban returning to Afghanistan and its effects on the monetary and fiscalpolicies of the country. This paper provides adequate background information and context by talking about thehistorical overview of Afghanistan which includes the social, cultural, and geographical history. Consequently, italso exhibits the reasons that caused the Taliban to take over the country with reference to the U.S.A, 9/11 attacksand finally the return of U.S.A troops from Afghanistan in 2021. This paper then explains the meaning of monetaryand fiscal policy while enumerating the roles and tools of the policies and the functioning. It then compares themonetary and fiscal policy of Afghanistan before and after Taliban’s takeover due to the lack of official data andliterature, this paper also proposes to first estimate a Taylor rule for the central bank of Afghanistan prior to theTaliban’s takeover and then predict the central bank’s reaction function to current output and inflation. Acomparison between interest rates and current interest rates sheds more light on the impact of the Taliban overmonetary policy. Finally, the paper presents a macro snapshot, acting as a comparative study between the inflationof Afghanistan and its neighbours.