Fiscal Policy within the IS-LM Framework

Fiscal Policy within the IS-LM Framework

by Shahdad Naghshpour


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Undoubtedly, what happens to the economy affects the lives of the citizens of a country, and often the lives of people in other countries around the globe. In addition to natural disasters two things affect the economy more than anything else: monetary and fiscal policies.
Fiscal policy and monetary policy represent forms of government intervention to influence market performance. Fiscal policy relates to government spending and revenue collection; monetary policy relates to the supply of money, which is controlled by factors such as reserve requirements and interest rates.
If there were a universally accepted set of rules that prescribe appropriate actions to bring and sustain prosperity to the economy the study of economics would have been a positive science, as opposed to a collection of normative beliefs. The study of these policies is normative in nature because fiscal and monetary policies do not necessarily impact everyone equally or in the same way. In other words not everybody loses or gains equally as the result of fiscal and monetary policies. Nevertheless, there are non-normative economic theories that explain the expected outcome of specific fiscal or monetary policies.
The economists that advocate for fiscal or monetary policies generally agree on the economic consequences produced by each policy when implemented. What differentiates the economists is the degree to which they believe in the effectiveness of the policy, their ability to know the extent of the need that it is intended to address, the proper amount of intervention required in order to effect the desired correction, and the length of the time it would take to see the consequence of the policy.
This book covers fiscal policy. It is part of a projected two volume set covering fiscal and monetary policies. The two volumes will be written to be complimentary to but independent of each other.

Product Details

ISBN-13: 9781606497227
Publisher: Business Expert Press
Publication date: 01/17/2014
Pages: 250
Product dimensions: 6.00(w) x 9.00(h) x 0.34(d)

About the Author

Dr. Shahdad Naghshpour received his PhD
from Oklahoma State University and his BA
from Tehran University. Currently, he is teaching
International Economics and Statistics at the University of Southern Mississippi. He received the Distinguished Professorship Award for 2008-09 in the category of Research. He has been a consultant to numerous state agencies,
such as the Southern Mississippi Planning and
Development District, as well as the Gulf Regional
Planning Commission.

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