The government either spends more, cuts taxes, or both. Taxes influence the economy by determining how much money the government has to. The word fiscal comes from a french word fisc, which means treasure of government. The most widelyused is expansionary, which stimulates economic growth. Fiscal policy is how the government uses taxing and spending to expand or contract economic growth. The two main instruments of fiscal policy are government taxation and expenditure. They consist of changes in government revenues or rates of the tax structure so as to encourage or restrict private expenditures on consumption and investment. Increasing government spending tends to encourage economic activity either directly. Fiscal and monetary policy instruments and economic growth sustainability in nigeria article pdf available september 2015 with 9,354 reads how we measure reads. In countries with a high debtgdp ratio, the required adjustment is very large, exceeding 5% of gdp see policy note no. Pdf fiscal and monetary policy instruments and economic. The instruments of fiscal policy are not the only tools policymakers use to promote healthy economic conditions. Central bank instruments operating target intermediate target ultimate indicator variables 10 objective.
They consist of changes in government revenues or rates of the tax structure so. Objectives and instruments of fiscal policy gktoday. The study first compares the different types of impacts the fiscal instruments have on vehicle mileage, congestion, emissions and welfare. In general, an expansionary approach is used when the economy slows down or enters a recession and unemployment rises. Monetary policy frameworks central challenge for monetary policy frameworks. Pdf fiscal policy as a stabilization instrument researchgate. Pdf the paper examined the relative effectiveness of fiscal and monetary policy instruments on economic growth sustainability in nigeria in. All the taxation and expenditure decisions of the government comprise the fiscal policy fiscal policy is. Government spending is fully funded by tax revenue and overall the budget. Fiscal policy instruments for reducing congestion and. The budget of a nation is a useful instrument to assess the fluctuations. Countries can reap sizeable budgetary benefits by adopting best practices in many spending areas, notably health and. Fiscal policy varies in response to changing economic indicators. The tools of fiscal policy are taxes, expenditure, public debt and a nations budget.
Politics and economic policy boundless political science. It seeks to control the total quantity of money and bank credit or to make the bank lend more or less. The two main tools of fiscal policy are taxes and spending. All the taxation and expenditure decisions of the government comprise the fiscal policy. In the united states, fiscal policy is carried out by the. Pdf fiscal and monetary policy instruments and economic growth. Countries can reap sizeable budgetary benefits by adopting best practices in many spending areas, notably health and education and via pension reforms. The instruments or methods of credit control or instruments of monetary policy are of two kinds. Congress uses it to end the contraction phase of the business cycle when voters are clamoring for relief from a recession. Against a backdrop of often poorly targeted and sometimes quite generous benefits, some governments may benefit from reforming transfer programmes to rein in spending. Long gaps between policy decision and ultimate objective. Pdf this paper investigates the role of the fiscal authority in the case in which a negative shock hits the economic system. They consist of changes in government revenues or rates of the tax structure so as to. Policy decision ct lb k long gaps between policy decision and ultimate objective.