Impact of fiscal and monetary policy on economic growth in Vietnam

This paper uses the Johansen cointegration test and the Vector Error Correction Model (VECM) to study the impact of fiscal and monetary policy on economy growth in Vietnam during the period from quarter I/2004 to quarter II/2013. The results showed the cointegration relation between the macroeconomic policies and economic growth. Besides, the variance decomposition and impulse response functions from VECM model showed the impact of the two policies on economic growth were limited, in which the impact of the monetary policy on growth is greater than that of the fiscal policy on growth. Subsequently, the paper provides some recommendations to improve the efficiency of the implementation of these policies in Vietnam.

The political economy of inflation

For the last 40 years, macroeconomics has been dominated by Milton Friedman’s view that inflation occurs when the supply of money rises more quickly than economic output – ‘too much money chasing too few goods’, as the saying goes. If inflation is always due to an imbalance of money supply and output, central banks alone determine the path of inflation, and fiscal policy merely has a redistributive function. This paper draws on historical and empirical evidence as well as recent theoretical literature to show that this view is mistaken. Monetary policy has redistributive effects, and fiscal policy affects the money supply. It is therefore impossible to separate them in practice. Both fiscal and monetary policy have inflationary consequences, and because their distributional effects are different, monetary policy cannot fully offset fiscal decisions. Fiscal and monetary policy are influenced by political decisions and are themselves political in nature. Since inflation reflects spending and saving patterns which are affected by political choices, it is fundamentally a political phenomenon.

Prospects for the US economy in 2022

Subject Prospects for the US economy in 2022. Significance The US economy has recovered quickly, with real GDP surpassing the level of the previous peak by the third quarter. Personal consumption spending is 8.6% above pre-pandemic levels but employment remains well below, while supply/demand imbalances will ease only gradually through 2022. Fiscal and monetary policy will be less expansionary, even if President Joe Biden’s second, USD2tn social infrastructure bill passes, and if rates stay on hold well into next year.

Linguistic Intervention in Making Fiscal and Monetary Policy

Linguistics is a branch of science that can maneuver to solve various problems. Linguistics began to succeed in canceling the predicate given to laypeople, namely as a linguistic science. Linguistics can even be a solution for various other disciplines, including fiscal and monetary policy issues. Fiscal and monetary policies that require analysis of the past, present, and future phenomena can be answered immediately with a linguistic analysis knife. Critical discourse analysis is confidently taking action as a solution to this problem. The holistic interpretative approach used in this study tries to analyze the text by relating and relevant to the context and then abstracting it into a complete picture. This study succeeded in finding that critical discourse analysis can play a role in 3 things related to fiscal and monetary policy, namely: (1) text analysis is an analysis of linguistic elements in sentence construction used in formulating policies, (2) analysis of discourse practice is a background analysis behind the decision-makers who formulate policies and other situations and conditions behind the birth of business economic policies, and (3) analysis of socio-cultural and political is an analysis that is identifying the changes that occur as a result of these policies. This proves the effectiveness of Linguistics in studying fiscal and monetary policy issues.

State's countercyclic fiscal and monetary policy in the field of macroeconomic regulation

The problem of countercyclical fiscal and monetary regulation has become very ur- gent in the last two decades. This article is devoted to the analysis and assessment of countercyclical fiscal and monetary policy from the point of view of the fundamental basis, as well as its practical application. The subject of this research is countercycli- cal fiscal and monetary policy from the point of view of its effectiveness in the con- text of the economic crisis. The methodological basis of the study is an overview of theoretical and practical models of countercyclical fiscal and monetary policy known in the scientific literature. The key objective of the study was to attempt to identify and evaluate countercyclical fiscal and monetary policies from the point of view of theory and practice. The result of the study was the conclusion that in a crisis, coun- tercyclical fiscal and monetary policy leads to ambiguous results, but on the whole, it is the most optimal for leveling the consequences of the crisis.

UNDERSTANDING MARKET REACTION TO COVID-19 MONETARY AND FISCAL STIMULUS IN MAJOR ASEAN COUNTRIES

In this paper, we examine the effect of fiscal and monetary policy stimulus actions during the COVID-19 pandemic on the stock markets of four ASEAN countries, namely, Indonesia, Singapore, Malaysia, and Thailand. Using time-series regression models, we show the relative importance of monetary and fiscal policies. Our findings suggest that 7-days after the policy announcement, fiscal policies helped cushion financial market losses in Indonesia, Singapore and Thailand. We do not find any robust evidence of policy effectiveness for Malaysia. While our investigation is preliminary it opens an additional avenue for understanding the effectiveness of policy stimulus.

CONSUMERS’ UPDATING, POLICY SHOCKS, AND PUBLIC DEBT: AN EMPIRICAL ASSESSMENT OF STATE DEPENDENCIES

We assess the impact of fiscal and monetary policy shocks on US survey-based consumer expectations within states of low and high public debt. Following an unexpected increase in government spending, consumption intentions rise in the low-debt state and fall in the high-debt state. Overall, such a shock has adverse effects on expectations in high-debt states. Similarly, contractionary monetary policy shocks induce pessimistic expectations in the high-debt state but not in the low-debt state. The estimated responses suggest that higher public debt fuels considerations regarding its repayment, giving rise to state dependencies in the updating of expectations in response to both fiscal and monetary policy shocks.

Understanding the Interaction of Chinese Fiscal and Monetary Policy

Interaction of fiscal and monetary policy is crucial for macroeconomic stability, especially for an economy with downward pressure as well as a tightened space for macro policy, like China. In this paper, we use a time-varying-parameter (TVP-VAR) model to study Chinese fiscal–monetary interaction and divide it into three periods. We claim that China went through a monetary dominant regime from 1996Q to 2017Q4 since the response of CPI to a fiscal expansion was negative in the short run and about zero in the long run, while the monetary expansion had positive effects on CPI. During this period, the response of government spending and money supply to each other’s shock had the same sign, indicating that the two policies acted as complements. However, we argue that 2008Q4 was a turning point that divided this period into two different periods. The response level of M2 growth rate to a fiscal expansion kept rising from 1996Q1 to 2008Q4, indicating the central bank’s increasingly active cooperation with fiscal policy, while it decreased from 2009Q1 to 2017Q4. Since 2018Q1, the economy has been going through a fiscal dominant regime in that the response of GDP growth rate and CPI to the fiscal expansion has sharply increased. We also argue that the relative change of the role between the two policies should be mainly attributed to the variation in the fiscal authority’s characteristics because fiscal response to a monetary shock has remained at a similar level the whole time, even if there have been changes in the characteristics of the central bank.