Friday, April 26, 2013
Austerity Calamity
[ http://huff.to/13wUzt1 ]http://huff.to/13wUzt1 Due 29 April 2013. What is wrong with the strategy demonstrated in the austerity process that conflicts with basic fiscal and monetary policies? How would you correct the problem?
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Spain's government is taking drastic measures to combat their rising unemployment and worsening economy. The austerity measures that they have taken have proven not to work, yet they continue to pursue these policies in the somewhat vain hope that they will, eventually, lead to economic recovery. The problem with Spain's policies (and austerity in general) is that they completely go against the correct, necessary fiscal policy. Macroeconomic fiscal policy proves that decreased government spending will increase the unemployment rate, yet Spain continues stringent government spending cuts. The unemployment rate, unsurprisingly, has risen dramatically in Spain because of this, to the point where 1/4th of their labor force is unemployed. I would take on basic expansionary fiscal policy to combat their recession and increase private spending. This would include decreasing taxes and increasing government spending, to generate optimism on the part of consumers. This increased spending would generate more jobs, as producers would need to keep up, and the economy may recover.
ReplyDeleteThe flaw in the austerity process conflicting with basic fiscal and monetary policies is the cuts made by Madrid have left the country in deep recession. The collapse of a property boom which was worth almost half of the GDP, tightened pure strings and investment plummeted. I would use expansionary fiscal policy to rid of the recession. Using a expansionary fiscal policy, the government would increase spending and decrease taxes.
ReplyDeleteSpain’s strategy demonstrated in the austerity process conflicts with basic fiscal and monetary policies. Spain is cutting spending and borrowing hoping something will save them. What is even worse is that they have hiked up their taxes; they are doing everything you shouldn’t do while you are in a recession. The funny thing is that they have decided that they are just going to wait it out and not make any more policy. I would have increased government spending and decreased taxes. That would make the people feel as if theres more money in their pockets, making them more confident on spending than saving.
ReplyDeleteThe austerity process does have flaws which is with fiscal policy and monetary policy. Spain shows the austerity process in their economic ways. Spain is cutting spending and borrowing to save money but they made their taxes higher. If i was Spain i would not have done that. Instead i would have done the complete opposite i would have raised government spending and decreased taxes so that they would feel as if they had more money in their possession
ReplyDeleteSpain's current economic conditions exemplifies the flaws in their decision making. Austerity is clearly not working in their economy. In order to decrease unemployment, Spain continues to decrease government spending which is the opposite of normal fiscal policy. I would advise Spain to increase government spending and decrease taxes to spur the economy.
ReplyDeleteThe flaws are with the decision making processes in the economic ways involved with the fiscal and monetary policies. Spain continues to cut its spending and borrow money thinking it will save money. In reality, Spain should spend more money and increase the circulation of money and decrease the taxes to allow more people to pay. Spain should also cease attempting to decrease the unemployment rate through decreased government spending.
ReplyDeleteThe austerity process has many flaws and does not seem to work for Spain. instead it's making everything that much worse. All the major and continuous spending cuts by the government is making the economy worse and increasing the unemployment rate. What Spain needs to do is increase taxes, and increase spending, both government and private. At this rate that Spain is going, the entire country will collapse.
ReplyDeleteSpain’s policy makers are making harmful decisions to its economy. In an attempt to reduce the budget deficit, Spain is decreasing government spending which is the same as implementing a contractionary fiscal policy, or austerity. The problem with this policy is that it can only benefit an economy that is in an inflationary period. Spain is a country with already high unemployment and spending cuts will push the economy in a deeper recession. I think it would be wise for the Spaniards to get rid of these austerity policies and start implementing true Keynesian economics; increased spending to inflate the economy. In turn, unemployment will fall and GDP will rise. In the end, the deficit will work itself out once the economy is in better shape.
ReplyDeleteThe economic policy Spain is trying to implement may be harmful for it's already hurt economy. Spain is decreasing government spending in an attempt to reduce spending, which is known as austerity, or contractionary fiscal policy. This policy, however, is only beneficial in times of inflation. Spain normally has high unemployment, and these spending cuts will send it into a deeper, longer, recession. Spain should abandon austerity, and begin to implement Keynesian economics. This increased spending stimulates the economy. Unemployment will fall, and the economy as a whole will recover quicker under a Keynesian policy.
ReplyDeleteThe strategy demonstrated by Spain is wrong because it goes against the proper way of handling its problems with fiscal policy. By cutting spending and borrowing money they hope to have an economic recovery, yet in macroeconomics when you cut government spending, you increase the unemployment rate. The opposite of what Spain needs. They have even increased their taxes. To help correct their problems, I would increase government spending and lower taxes on their citizens. That way, the consumers have more confidence in the economy and will start spending again.
ReplyDeleteThe demonstrated strategy in the austerity process is only worsening the economic state of Spain. The worst possible policy they could have probably implemented is the one in which they did, contractionary fiscal policy. This type of policy is intended for use during an inflationary period, not a recession. Because Spain is in a recession the economy is only becoming worse with this applied policy. In order to correct the issue, an expansionary fiscal policy should be applied with an emphasis on an increase in government spending, creating consumer confidence, and making sure both businesses and the population are spending money to get the economy back and rolling.
ReplyDeleteSpain's gov't is trying to fix the rising unemployment and economy. The things they've done have not worked and they continue the same patterns. Their problem is that they ignore correct fiscal policy. It is proven that macroeconomic fiscal policy that decreases gov't spending will increase the unemployment rate... and Spain still does what they've been doing. I would use expansionary fiscal policy for their recession and increase private spending. This includes decreasing taxes and increasing government spending. This would help them to recover.
ReplyDeleteThe flaw in the austerity process conflicting with basic fiscal and monetary policies is the cuts made by Madrid have left the country in deep recession. The collapse of a property boom which was worth almost half of the GDP, tightened pure strings and investment plummeted. I would use expansionary fiscal policy to rid of the recession. Using a expansionary fiscal policy, the government would increase spending and decrease taxes.
ReplyDelete_jacob hochmnan