Developing countries often require clear, well-planned, fiscal consolidation to restore economic stability. Countries have an interest in minimizing the growth cost of this adjustment, which may vary depending on the fiscal instruments deployed and the choice of monetary/exchange rate policy. To assess the potential tradeoff between fiscal savings and growth, we use empirical (employing the Blanchard-Perotti framework) and DSGE modeling approaches to estimate fiscal multipliers by policy instrument for Bolivia, a lower middle income commodity exporter with a de facto pegged exchange rate regime. The study exploits the DSGE modeling structure to arrive at a preliminary assessment of this interaction of fiscal and monetary policy in a low middle income country under different exchange rate regimes.Fiscal multipliers depend in part on the accompanying monetary/exchange rate policy. In the basic Mundell￾Fleming framework, fiscal multipliers are normally higher under a peg than with a floating exchange rate. However, this ordering can be reversed if capital mobility is sufficiently low, because the current account gap resulting from a fiscal expansion under a fixed exchange rate requires a large interest rate increase to attract sufficient compensating capital inflows if mobility is low, slowing the economy. Low capital mobility could be due to a sudden stop, financial market restrictions or other factors, and may be quite common in practice.