Question

You are now an adviser to President Obama. You need to give him 5 concrete suggestions on fiscal policy and monetary policy in an effort to get the economy to continue to improve. Give your suggestions and explain why you think your choices are good choices. (500 words minimum)

Answer 1

5 suggestions :

• Fiscal -monetary policy framework must aim to ensure that no individual member runs excessive deficits OT builds up excessive debts
• Use fiscal space to assist monetary policy in closing the negative gaps and raising potential growth
• These policies should support the economic growth by reducing distortionary taxes and unproductive or poorly targeted expenditure while increasing productive investment.
• Conduct monetary policy when fiscal space is limited to fulfill price stability and keep inflation close to target
• Central Bank independence must be critically achieved with monetary -fiscal policy coordination and the monetary and fiscal authorities acting independently within their mandates.

According to me these points are very helpful in improving the economy as the policy makers in many countries face considerable challenges in fostering sustained strong growth, price stability and financial stability and this will require a coherent, integrated policy strategies that includes contributions from fiscal and monetary policies