Article Analysis On U.s Fiscal Policy And Its Impact On Gdp

In this I m going to analyze the efficiency and sustainability of the US monetary constitution from the Keynesian perspective . Also I m going to elaborate on the touch on of financial form _or_ system of political relation on gross domestic product and the overall state of economyFirst of all , permit me remind you of the most important concept and terms employ by Keynesians to explain the basics of fiscal form _or_ system of government . The gross system and the structure of government disbursal influence the direct of good and services . Therefore , these two factors have an impact on the level of GDP in the short become . So we come to define Keynesian fiscal policy . Keynesian fiscal policy means reforming the system of gross and government spending in to facilitate the level of GDP According to Keynesian economic doctrine , an join on in spending leads to an increase in output , while increase in taxes has the opposite implication . Now lets apply the Keynesian theory to practical analysis .The tragic events of 2001 were a long shock for US economy . After the bud witness tautologic of 127 billion in 2000 , the country suffered from a deficit of 158 in the following year . The challenge was to restore economy utilise fiscal policy as an important regulatory peckerwood . In 2002 the decision was to increase spending in hearty programs , namely the Medicare , income security , unemployment compensation . Still , defense and motherland security were also funded betterBut we should keep in mind that the US popular government deficit ranks almost the first in the industrialized world . Public debt levels also remain higher(prenominal) . As a consequence , today s primary counselling of the US fiscal policy is cutting taxes and increasing government spending for homeland security and defense . According to Keynesian doctrine , cutting taxes and increasing spending must resultant role in considerable GDP workth . From the most general point of view , we must admit that the US fiscal policy is aimed at reducing budget deficit and modify economy . But such policy has some operative drawbacks . First of all , such policy doesn t encourage cloistered investment . Secondly , such policy causes additional blackjack on the interest ratesKeynesians suggest that decreasing taxes and increasing spending may boost GDP in the short untangle .

If we look carefully at the long-term consequences of the current US fiscal policy , we ll see that such fiscal policy may deteriorate further growth in industrial productionBut we should take into account the social and demographical issues that put an additional wardrobe on the budget . There is an important problem to dish out with . The baby-boomers generation is retiring now , and government spending on medical aid and social security should be evermore change magnitude . Also , according to Keynesian theory , increased export will reverse the situation . If the government takes progressive steps to enhance the export flows GDP will grow and unemployment will be reduced in the short runFrom account statement we know that expensive government programs in combination with exuberant consumer spending may push the demand for goods and services cold beyond the limits of economic productivityRunning surplus to eliminate fiscal instability isn t the best solution of the abovementioned problems for the ample reason that this step fundament shift the problem to another branch of economy . this instant the need for efficient and rational reform of the US fiscal policy is evidentSourcesHYPERLINK http /www .amazon .com /exec /obidos /search-handle-url /index books field-a uthor Burger 20Philippe /442328 Philippe Burger Sustainable monetary Policy and Economic Stability : Theory and Practice (New Directions in Modern Economics , Edward Elgar Publishing , January 1 , 2004 , ISBN...If you want to get a full essay, order it on our website: Ordercustompaper.com

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