Topic:”Is monetary policy alone enough to stimulate economic recovery?”
Nowadays the global economic circumstances continued to pose various uncertainties and challenges such as the global economic recovery, European debt crisis, natural calamities and the outbreak of animal diseases, including political conflicts and others, all of which have resulted in negative impact on global economic growth particularly on social-economic development of countries worldwide. In fact, there are currently three huge issues that happening in the global economy. Firstly, the solidly political problems in Middle East Asia countries that seems to be expanded around their neighboring countries quickly, which we known in another name of happened situations as “Arab Spring” which means the Arab awakening relevant to a revolutionary wave of demonstrations and protests in dictatorship occurring in the Arab world such as Libya, Egypt, Tunisia, Iraq particularly. So as we know well these countries are a major oil source of the world how much they produce or supply to the world markets it would certainly directly affect to people’s lives all around the world – oil is something that any business cannot live without it whether they are small, medium, and especially big enterprises.
So if the oil prices vary often due to the political events that happening right now it would also effect frankly on the global economy subsistence. Secondly, looks like being the breaking news so far that living the European countries or as we saw regularly in this period on TV about the European debt crisis – yes, all of these countries are a main part of the global economy in terms of being a big goods import-export market come from multi-intercontinental countries. Moreover, they are greatly important suppliers on foreign investments to around the world especially in Southeast and East Asia from the past to the present. For this reason, if the massive liabilities not drop out of this terrible circle in the near future under the sole agreement of bail-out loans of European members and also the International Monetary Bank (IMF) for Greece, Italy and others amid the sights of people around the world it would definitely influence to the global economic stability worriedly whatever in the stock markets or the world trade system. Lastly, this country is the biggest economic function of the world for a long time –that is, the United State of America, which is currently facing the deep debt that never done before in American history. The United State government particularly in the term of President Barack Obama who has built the surpass of debt ceiling in recent months which has been led American economy to be pretty harder to solve the problems in the short term. That also means that the possibility of being number one as the global economic leader for a long time will probably fall down to China in the future. This is due to Republic of China has the economic growth
The Essay on Global Political Economy
Sustainable development is defined as development that allows us to meet our current needs without destroying the means of livelihood of future generations. There are three basic elements of sustainable development: (1) economic growth; (2) social development; and (3) environmental protection. Undoubtedly, all of these elements concern our world as a whole. Thus, it is essential to acknowledge ...
rates systematically and continuously with a large of human workforce come along with the investments all around the world that enable to encourage the gross domestic product (GDP) as well each year. However, these aforementioned countries that are represented about the current situations as a crucial part of the global economy so far needed to have appropriated policies to deal with the problems to be impacted in positive sign on both internal and external countries as well as possible for a better state. However, not only these specific countries but also other individual ones need to apply the most suitable policy for boosting the economic growth in both the short and long run strongly. Up to now, in theory there are two significant policies to strengthen the economy of the country each stage – they are fiscal policy and monetary policy for using in addressing the economic issues, but if asking me that what policy to be applied for solving the economy to get the best result? Or the similar question is that is monetary policy alone enough to stimulate economic recovery? As today’s topic, before answering these matters I always like to think of the culprits that why it was that? And what causes to contribute to the problems? Or something likes that so that I am able to see the general images of the economic issues in order to embrace the right tools for those.
The Term Paper on Economy 320 Money and Banking
... exist from the monetary policy tools to the outcome of the inflation. This is a serious problem specifically for countries that have ... respond appropriately shocks that are affecting the domestic economy. When compared to money targeting, inflation targeting is advantageous in that its ... also feared to be capable of lowering the rate of economic growth as it has the potential of increasing the ...
In real-life economy there are possibly loads of cases of economic problems that each country has to encounter in the economic development processes of the country unavoidably in each period of time. In addition, any time when the government has adopted some policies he/she commonly has to think of the consequences in the long term too. Let’s have an overview of the need for monetary policy – that is, during a recession, profit-oriented banks would be prone to reduce the money supply by increasing their excess reserves and declining to lend to less creditworthy applicants – if the government did not intervene. As we know, the money supply is an important influence on aggregate demand, so such a contraction of the money supply would aggravate the recession. On the other hand, during an economic boom, profit-oriented banks will likely generate the money supply expand, adding undesirable momentum to the booming economy and paving the way for inflation. The authorities must intervene to prevent this rapid money growth. Hence, if turns back to the main question as a today’s topic that only monetary policy is enough to stimulate economic recovery? – I could say that between in theory and practice is quite a greatly different form of economic policy’s performance. Similarly, in theory you can certainly analyze the general situations to find out the right policy to resolve problems within a period of time, knowing that in reality of
The Essay on Economic Intervention Government Money Prisons
Economic Intervention Every day our government makes economic decisions that affect our country and ourselves. Some of these decisions are good and benefit our lives greatly; however, many of our government's decisions, such as where our tax money should go, are not in our best interests. The Canadian government, although it is tightening up it's measures now, has been very lax with our hard ...
practicing it is most likely not to be treated from the planned strategies. First and foremost, in order to see the future situations might happen in the economic circle one day – let’s imagine the current economy of a country that is facing an economic recession badly from either the global economic crisis indirectly or within the country directly. So for this circumstance mostly it would result from the shrink of domestic investments, higher unemployment, occurring appreciation and lead to the subsidence of exports, GDP reduced finally. Moreover, the national reserves are abated due to the demand for some amounts of money to bring to compensate on trade deficit. Thus, if we need to have a solution for dealing with this issue – yes, we definitely could do to economic recovery but indeed not only monetary policy to handle it. For instance, if the government applies an easy monetary policy or expansionary monetary policy is that will lead to lower interest rates, and these lower interest rates encourage investment, which has multiplier effects on aggregate demand and also causes some inflation under normal circumstances. But exactly how much inflation it causes depends on the slope of the aggregate supply curve.
Accordingly, the purposes of using this policy is to magnify the money flows in the economy by low interest rates, and also like to use commonly in case of economic recession or depression due to their aggregate investments and household expenditures are in a low level, in addition, it generally helps to recover the economic growth as well. However, if we use solely an expansionary fiscal policy it would work for boosting the aggregate expenditures of the people and also the government spends further money into the economy to stimulate the private investments as well. But in fact it may not accomplish the plan efficiently and timely due to the revision to arouse the economy needed to have mutual policies as a powerful implementation of the government tools. But at the same time it could simply become a negative impact on the side of the government’s financial sector because of the fiscal management inefficiently and irresponsibly causing to a financial crisis like the case of Greece and other European countries right now. Because of this, using this fiscal policy should be more responsible and careful with corruptions, including enhance that tendency and improve the economy’s performance. In conclusion, in my perspective we cannot certainly to grow the economy from recession for a period of time by monetary policy alone because the government particularly in the developing countries should invest in the economy at first through using expansionary fiscal policy – that is, its plan for spending and taxation sometimes use them together but sometimes by only cutting taxes down or government spending more in the economy for infrastructure development such as roads, electricity, water, and other facilities in order to make more confidences for both domestic and foreign private investors to come back to
The Essay on Global Implications Of Dollarizing Economies To Attain Monetary Stability
Global Implications of Dollarizing Economies to Attain Monetary Stability Dollarization is when one country abandons its own currency in favor of another countrys ... with the US dollar. At the end of the economic boom the government was enjoying an increase in tax revenue which led ... businesses. A currency board is one example of a fiscal policy that has a fixed currency exchange. This situation is when ...
invest again increasingly. On the other hand, if there is only the central bank promulgates monetary policy alone to recover the economy it then would obviously emphasize on diminishing the rates of interest in order to escalate both domestic and foreign investments as they expected, but basically the intuition of investors they usually do not like to invest at first amid the country economic recession at that time, and also there is no strong reason for them to brave to take risks in the stage of economic recession. In brief, it is clear that the government should do is to apply mutually together depending on which one the government accentuating on specifically to influence to the economic growth of the country in the long run.
By Mr. Amphon KEOVONGKOTH
Student of Department of Commerce, Faculty of Economics and Business Management, National University of Laos
E-mail: [email protected]
Tel: +856-20-77916969; +856-21-262681
