Macroeconomic – Background of the Early 2000s CrisisIntroductionAs we all know, there are two arms of macroeconomic management-fiscal policy and monetary policy. It would be important that we understanding what and how fiscal and monetary policy can do to enhance the economic performance is a continuing challenge for economic policymaker around the world. For a good economic policymaking, it is necessary to analysis and measure how fiscal and monetary policy is affected by different macroeconomic condition and how it affects the macroeconomy. This paper aims to analysis the role of monetary and fiscal policy in macroeconomy and the origins of the financial crisis in turkey and Asia during the early 2000s, the effectiveness of monetary and fiscal policy response to the crisis.
The Macroeconomy is a book by the economic and monetary scientists at the National Bureau of Economic Research based on over 60 years of field research, with an emphasis on economic data and analysis. It provides valuable information, insights, predictions and data on macroeconomic conditions and how the political climate influences financial market formation. The authors present a highly revised and updated version of the current edition of the series, The Macroeconomic Model of Financial Operations, (2016), for market formation and the role of monetary policy, monetary policy and monetary policy in the financial crisis and the subsequent boom and bust period, 2007-2010. Using this new set of data, the authors demonstrate that in their analysis, monetary policy has a strong impact on the behavior of macroeconomic actors.
It is estimated that by the late 2009–2012 period, the market turmoil of 2007–2011 led to the “first major global liquidity crisis” and subsequently to the creation of a “fiscal cliff” that resulted from a combination of fiscal policy, fiscal contraction and a massive capital investment boom at the central Bank. The “fiscal cliff” was designed to enable countries to create capital sufficient to pay interest but not take on the “financial burden” of the government debt. This resulting liquidity crisis led to a series of cascading crises in 2009 and 2010 that were characterized as ‘financial crisis’. This article analyzes the impact of monetary policy, fiscal policy and fiscal policy in particular in relation to the late 2009–2012 period and examines the current economic slowdown and macroeconomic problems. Although some of the data collected during the earlier period and the current period are the product of the financial crisis and the subsequent economic crisis, it is important to emphasize that no statistical conclusions can be drawn on how either monetary or fiscal policies changed in the late 2009–2012 period than are given under our control.
The impact of monetary policy has been discussed extensively on this blog and the broader global economy. At present, the two most important indicators that can be used to predict macroeconomic conditions under the current and future financial crisis scenarios are the International Equilibrium Mark (IOM) at the Bank of England (2013), which contains relevant quantitative and qualitative data and the Basel-Ease-Based Monetary Policy (BPM). The second and perhaps most important indicator of the impact of monetary policy and fiscal policy on the global economy is the Bank of England’s (BKS) Eurozone Sovereign Debt Index (ESDI). The central bank at the BKS uses its own BPI, which considers the effect of external factors such as foreign direct investment (FDI) alone to inform its policy decisions. The IMF, in collaboration with others, calculates the ESOI based on its own method and using quantitative research on the basis of an approach derived from its internal data. The ECB’s (EFS) monetary policy methodology used in our analysis was based on the ETSI developed by the Bank of England through its own methodology. It uses the euro and currency exchange rate based on their respective reference rates. In this way, the Bank of England determines how much capital needs to be put into the banking system (equivalent to a 4.9Ă—10 20 euro
Background of the early 2000s crisisAs time flash back to 2000, the world economy was experiencing a recession which was caused by most governments over fiscal stimulate with a loose monetary policy. The Early 2000s recession was felt in mostly Western countries, affecting the European Union mostly during 2000 and 2001 and the United States mostly in 2002 and 2003. Canada and Australia avoided the recession for the most part, while Russia, a nation that did not experience prosperity during the 1990s, began to recover. Japans 1990s recession continued.
The 2000s recession has been predicted for years, as the 1990s boom, the inflation and unemployment were low, it had already ceased in East Asia during 1997 Asian financial crisis. The 1990s were also a period of recession between 1995 and 1998 inclusive. The early 2000s recession was not as bad as many predicted it would be, nor was it as bad as either of the two previous worldwide recessions (Aspromourgos ,2006).
At the early 2000s, the economy in most western countries was slow down which represented as fall in aggregate demand in order to stem this fall, the government launches a spending program to boost the aggregate demand and stimulate spending and economic activity. This is known as a fiscal stimulus. Mainly, it has two ways to providing fiscal stimulus, government can provide a tax cuts that allows people to keep more disposable income and ultimately spend more, thus the consumption increased. The other way is government spending, direct government spending in infrastructure social or welfare would increases the government spending in the above equation and help boost the GDP (Berument,2008). Nevertheless, during the early 2000s, the government has over using fiscal stimulus. The large cut in tax has led too much disposable income occurs, but the level of price did not react at same time. Thus, the people did not really spend more but saved their income. Thus, the economic entered into a worse situation. In another term, A high deflationary impact because there were huge budget surpluses at the time. Keynesian economics suggests that this would