The Great Recession Fiscal Policy: Analyzing Problems and Solutions

In the late 2007, early 2008 the United States and the world was hit with the most serious economic downturn since The Great Depression in 1929. During this time the Federal Reserve played a huge role in assuring that it would not turn into the second Great Depression. In this paper, we will be discussing what the Federal Reserve did during this time, including a discussion of our nation’s three main economic goals which are GDP, employment, and inflation. My goal is to describe the historic monetary and fiscal policy efforts undertaken by the U.S. Government and Federal Reserve, including both the traditional and non-traditional measures to ease credit markets and stimulate the economy.

All the people in the United States are effected by the fiscal policies. Team C will address the how and why the U.S. budget deficits, budget surpluses and debt effect different individuals and institutions. There are a wide array of individuals effected by fiscal policy, which include tax payers, future Social Security and Medicaid users will be effected. The unemployed individuals and University of Phoenix students will be effected by fiscal policy. The U.S. financial reputation , an exporter, and importer, and effects of the GDP will also be covered about the effects of the U.S fiscal policy.

Fiscal policy: Given the breadth and depth of this recession, it was clear that the Treasury and the entire Obama administration had to take bold actions. In fact, right at the beginning, they were committed to a fiscal stimulus policy package which would be “substantial” enough to pull the economy out of the recession. The final stimulus package signed into law in 2009, the American Recovery and Reinvestment Act, was totaled $787 billion including about one-third tax cuts and one-third aid for states and the unemployed. Of the rest, labor health and education investment got 8%, and infrastructure investment got about 7%. It also included a large amount of government money to

Since the Great Recession, in response to the financial crisis and its impact on the economy, the government has increased government spending markedly in order to stimulate economic growth that leads to extremely high U.S. deficit in 2009, $1,413 billions due to Obama

The economic meaning of a recession is that the gross Domestic Product (GDP) has declined for two or more consecutive quarters. Unemployment rises, housing falls, stocks fall and the economy is in trouble. Whenever the government sees that the economy is entering a recession it is important for it to act. The U.S acted in two ways during the Great recession of 2008 through fiscal and monetary policies. Renaud Fillieule identifies that “ Monetary and credit expansions have been the main tools used by the U.S. government and central bank to try and recover economically from the Great Recession of 2008” (Fillieule r, Pg. 99 2016). These Keynesian policies are debatable among economist, none the less they were implemented and put the U.S on the road to recovery.

The policy response from the G.W. Bush is that there are three main parts to the fiscal policy stimulus. An individual tax that the Internal Revenue service sent out started in mid-2008. There were two business provisions that encourage investment during 2008 by increasing limits on expensing investment costs and accelerate depreciation of qualifying investments. The specific steps taken in early 2008 were the home owner purchases rebate and tax cuts.

Have you ever wanted explore at time other than the one you lived? I choose to analyze the July 1990-March 1991 recession that lasted for 8 months. Recession can occur at any point in time and can have a number of causes. In this paper, I will talk about what caused this recession, fiscal policy, monetary policy and end with recovery and expansion.

Ten years ago, a housing bubble bust in the United States housing market, and it sparked the worst economic recession since the Great Depression in the nineteen-thirties. Unlike the Great Depression, there are policy actions in two-thousand and eight that are used to stabilize the economy: fiscal and monetary policy. I will be discussing the fiscal and monetary policy responses by the United State Government, and the Federal Reserve Bank, and how and why these were the responses to the United States financial crisis of two-thousand and eight.

The financial crisis of 2008 started off from the United States of America, and eventually expanded its reach to the whole world, displaying the inefficient and improper policy implementation by the US government. However, the US government presented monetary and fiscal policies to ensure the economy move towards the economical developmental track for the country. Such policies have been discussed in the research paper to aid with the understating of the reasons of the financial crisis and the effort the government put in to recover from it.

I consider the general principles of fiscal stimulus and the role of tax measures. Because fiscal stimulus does not create output and jobs from thin air, but “borrows” them from the future, stimulus must be properly timed to be beneficial. Although it is reasonable to pursue fiscal stimulus under today’s harrowing conditions, expectations should remain limited. Stimulus measures should be temporary or business-cycle-contingent. Government purchases do not necessarily provide a larger (correctly measured) stimulative effect than tax cuts. On a more specific note, allowing greater use of net operating loss carryforwards during recessions than during expansions can provide a modest fiscal stimulus while also reducing tax penalties on risky

The United States impacts various policies not only at home but abroad. It has been a powerhouse for many years, and its strengths and weaknesses impact other countries. The deficit, surplus, and debt are three major areas influencing these policies. These three factors have a huge impact on many areas we will discuss. These include taxpayers, the future of Social Security and Medicare users, the unemployed, a University of Phoenix student, the United States’ financial reputation on an international level, a domestic automotive manufacturing, or exporter, Italian clothing company, or importer and Gross Domestic Product (GDP).

The Global Recession of 2007-2009 also considered as the “Great Recession”, which officially lasted from December 2007 to June 2009, was the worst recession that have happened since the Second World War. European countries as Greece, Germany, and Spain were the most affected. All of them believed in the implantation of “Austerity measures”, set of policies with the ambition of reducing government budget deficit by cutting expenditures, increasing taxes or a mixture of both. Governments reacted to the eurozone debt crisis and Great Recession in different ways. One pattern is that expenditures of government rose and taxes fell from 2007-2009, and that the reverse took place from 2010-2012.

Since the global financial crisis of 2008, the UK government has been implementing various policies to combat the recession and stimulate economic growth. This essay will look at how effective the fiscal and monetary policies used since the crisis are in achieving the four-macro economic objectives. In addition, I will provide my input on the best way the UK government can carry out these policies.

Economic analysis 2006 and 2011. The five year benchmarks selected for this analysis do not well represent the fluctuations in the economy in the interim years, which have been substantial. Naturally, the fiscal crisis of 2008 to 2010 had deep and enduring impact on the national and global economies, but the "bookend" years of this analysis effectively obfuscate the volatility resident in those years. Fiscal year 2008, for instance, the inflation rate reached nearly 5%, the unemployment rate peaked in 2009, and the interest rate reached 5% in 2007. What this analysis does provide is a look at the stabilization of the economy without the noise of the intervening fiscal crisis. Through the monetary policy by The Fed during the fiscal crisis, efforts have been directed at maximizing employment and price stability. As a result, the interest rate will remain low with no changes anticipated until 2014. Inflation has stabilized, interest investments are low but gradually increasing, and the unemployment rate is slowly dropping but is not expected to accelerate.

Thomas Stratmann and Gabriel Okolski (2010) raised questions on the decision of U.S government for spending distinctly when the financial crisis happened in the country. They have made analysis of historical records and made a remark that government spending cannot be an automatic solution for an economic growth even during crisis. Their empirical analysis result showed that government expenditure applied with the expectation of stimulating the economy may not achieve the targeted goal in practice.