The topic of this paper is monetary and fiscal policy, respectively their emergence and development, both in Republic of Croatia and European Union. The main goal of this paper was to study from where are monetary and fiscal policy came from, what are their main goals and functions, and how are they implemented in the European Union, but also how they reflect on Republic of Croatia. Descriptive, compilation, comparative, historical, and other methods were used in the preparation of this paper. The literature used in this paper is based on books, scientific articles, manuals, and relevant online sources. The paper is divided into five basic sections. The first part is introduction. The second part explains the macroeconomic instruments and macroeconomic policies. The third part is about monetary policy, the main body of monetary policy in Republic of Croatia and the Croatian national bank, but also the main institution of monetary policy in European Union which is European central bank. The fourth section describes fiscal policy and it is divided into fiscal policy in Republic in Croatia and the fiscal policy of the European Union. In the fifth, last section, a conclusion is presented. At the end of paper there are lists of references and lists of tables and charts that are used to create this final paper.