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In: Economics

Under what situation do Monetarist recommend the Government increase government spending?

Under what situation do Monetarist recommend the Government increase government spending?

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Expert Solution

Many time government spending for social welfare of the country on the suggestion of monetarist. Monetarist suggesting government for spend on development, health issues, social welfare, science and technology, and on other factors which could helps to improve the economy.Under following situation monetarist recommending the government to increase government spending. For pension spending. an aging population requires higher government spending pensions and healthcare spending but pension spending has no impact on boosting productivity of economy.

For education and training- if successfully targeted on improving skills and education government spending can increase labour productivity and enable higher long-term economic growth.
Infrastructure investment-higher spending on roads and Highway can help remove supply and enable greater efficiency for the economy.This can also boost long term investment in economy and economic growth.
Monetarist also recommend the government for increasing spending on infrastructure investment and also higher interest payments. if the government has higher debt and higher bond yields then it can call increase cost of borrowing. The spending will go to investors and have no benefit for the economy.

Also monrtarist recommend government for spending on welfare schemes. Desh welfare spending will help to reduce level of inequality.

For current scenario Monetarist suggest government increase their spending on health issues of the pandemic of covid-19. As we all know there is no vaccine and treatment available for covid-19. Almost every government spending for fighting with pandemic of covid-19 to save their citizens. That's why in this situation Monetarist recommending the government for increasing their government spending for this covid-19 Pandemic.

Rahul Sunny answered 2 years ago
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