5 edition of Fiscal and monetary policies and problems in developing countries found in the catalog.
Includes bibliographical references and index.
|Series||Modern Cambridge economics|
|LC Classifications||HG195 .E83 1983|
|The Physical Object|
|Pagination||xxii, 287 p. :|
|Number of Pages||287|
|ISBN 10||0521249007, 0521270499|
|LC Control Number||82017831|
Further, fiscal policy in a poor country may be used to reduce inequalities in income and wealth distribution by means of taxes and government expenditure. It has also been argued that since the bulk of money supply in an underdeveloped economy is in the form of currency rather than bank deposits, the central bank can regulate with greater efficiency the rate of spending by controlling the currency as such. In theory, holding the discount rate low should induce banks to hold fewer excess reserves and ultimately increase the demand for money. Generally, a developing country is prone to the efforts of international cyclical fluctuations. Loss aversion can be found in multiple contexts in monetary policy. Black money is used for activities such as hoarding and speculative motives etc.
This parallel economy helps speculations and illegal trading and thereby reduce the efficiency of monetary policy. The aims of rapid growth and attainment of equality in income are two paradoxical goals because growth needs more savings and equitable distribution causes reduction of aggregate savings as the propensity to save of the richer section is always high and that of the poor income group low. This needs equilibrium of savings and investment. Further, when prices are rising, government has to adopt a surplus budget at an appropriate time in order to avoid secular inflation. You can help adding them by using this form. It would have to take on a direct and active role firstly, in increasing or helping to create the machinery needed for financing development activities all over the country, and secondly, in ensuring that the finance available flows in the direction intended.
The combination and interaction of government expenditures and revenue collection is a delicate balance that requires good timing and a little bit of luck to get it right. It also undertakes the policy of planned investment in the public sector. Recent attempts at liberalizing and reform of financial markets particularly the recapitalization of banks and other financial institutions in Nigeria and elsewhere are gradually providing the latitude required to implement monetary policy frameworks by the relevant central banks. Obviously, taxation and public expenditure is a powerful instrument in the hands of public authority which greatly affect the changes in disposal income, consumption and investment. Sometimes, even if the fiscal action is taken at a right time, in quantitative or qualitative terms, it may not be adequate or appropriate.
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Further, fiscal policy in a poor country may be used to reduce inequalities in income and wealth distribution by means Fiscal and monetary policies and problems in developing countries book taxes and government expenditure. Inflation in an under-developed economy generally occurs when there is an abnormal increase in the effective demand exerted mainly by huge government expenditures under the planning process.
In a poor country, fiscal policy can no longer remain a compensatory fiscal policy. With additional injection of purchasing power, the demand rises and supply remains inelastic on account of its structural rigidities, market imperfections and other bottlenecks which in turn lead to inflationary pressures on the economy.
Above all, the growth objective of monetary policy in underdeveloped countries implies the promotional role of monetary authorities. This puts a limitation on the monetary policy. According to Raja J. You can help adding them by using this form. As a result, after the s global inflation rates, on average, decreased gradually and central banks gained credibility and increasing independence.
See Less - Details. This implies that the government should use its powers to increase aggregate demand by increasing spending and creating an easy money environment, which should stimulate the economy by creating jobs and ultimately increasing prosperity.
Government incurs huge expenditure on various types of development projects. In an under-developed country, the monetary policy has to play a vital role in developing the economy from a stage of primary backwardness to a stage of self-sustained growth.
This will help to reduce the problem of unemployment. Using just one method may not be the best idea. There is substantial difference in how countries have managed to modernize the framework for monetary policy, and the report draws lessons from the experiences of a number of countries in a background paper.
The approach to fiscal policy in an economy which is developing must be aggregative as well as segmental. In developing countries[ edit ] Developing countries may have problems establishing an effective operating monetary policy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ruth Austin The email address of this maintainer does not seem to be valid anymore. On the contrary, during inflation, anti-inflationary policy measures help to plug the inflationary gap.
He developed most of his theories during the Great Depressionand Keynesian theories have been used and misused over time, as they are popular and are often specifically applied to mitigate economic downturns. As its role is not compulsive but permissive only which creates serious limit on the efficacy of monetary policy.
In particular, while there is not a specific set of preconditions that countries need to meet, critical first steps include a commitment to the primacy of price stability, and the ability of the central bank to pursue that goal.
To some economists, this inflation is an inevitable price to be paid for economic growth. But heavy doses of deficit financing has proved inoperative to achieve the objectives of monetary policy.
Besides, Govt.Nov 06, · According to the IMF’s April Fiscal Monitor, average public debt of advanced economies was % of GDP inFiscal and monetary policies and problems in developing countries book fiscal capacity to respond to crisis. Meanwhile, monetary policy options are exhausted after a decade of ‘unconventional’ monetary policies.
This paper examines the role of corruption in the design of monetary policies for developing countries in a framework of fiscal and monetary interaction and obtains several interesting results. First, pegged exchange rates, currency boards, or doUarization, while often prescribedCited by: Raghbendra Jha Fiscal Policy in Developing Countries: A Synoptic View 2 I.
Introduction Fiscal policy plays an increasingly important role in many developing countries. Decisions on fiscal policy, especially if properly synchronised with monetary policy, can help smoothen business cycles, ensure adequate public investment and redistribute.Mar 22, · Abstract. Low levels of economic development constrain fiscal pdf monetary policy in several ways.
Few developing countries are able to raise much direct tax revenue, and so must rely on other sources of funding, including seigniorage.FISCAL CRISIS AND FISCAL REFORM IN DEVELOPING COUNTRIES - John Toye Mexico’s debt default in sparked off a macroeconomic crisis, that national policymakers in developing countries interpreted to be a systematic breakdown of existing model of economic development (the author calls it a mistaken notion).This book is concerned with the use of fiscal and monetary policies to ebook three major obstacles ebook development commonly faced by less developed countries: inadequate investment; misallocation of investment resources; and internal and external imbalances i.e.
inflation and balance of payments deficits. The book is divided into six chapters the first two of which are devoted to the.