Hello,

I would like to share an article about the ramifications and an increase in fiscal policy would mean to the United States in the next three years, affecting the economy.

Since covid-19 began in early March 2020, the economy including jobs and businesses has been affected in a negative way. Fiscal policy including packages has totaled around $6 trillion dollars. With the quarter 3 results specifying that the economy is coming back slower than projected, without intervention of fiscal policy it will only hurt the economy.

The article specifying GDP with 5 policies including: "a second round of checks to households, a resumption of enhanced unemployment insurance benefits, aid to state and local governments, support for small businesses, and other forms of fiscal support". By increasing Federal spending on the 5 policies mentioned by $2 trillion it would raise real GDP (inflation) by “0.2 percent in 2020, 4.0 percent in 2021 and 2022, and 1.6 percent in 2023 above the level”. Boosting these would entail creating more jobs and add to everyday spending of goods and services. CARE Act is very important in pertaining to Fiscal Policy due to it was an act of help to our small businesses and people who needed assistance in Covid-19.

The effect of fiscal policy to the US economy is often described as the full impact in real GDP growth. It states in the article, if were to send another $2 trillion now, and not over spend, it would help the economy budget the costs from local and state governments. If we were to give out a larger package it would hurt the economy by local governments slowing putting it back to the economy and unemployment packages would decrease amongst others would be negatively affected. Overall, if we were to enact $2 trillion again early 2021 it would relay a positive aspect to the economy in 2023, showing now would be the best time for fiscal policy.

My overall thought on the article is that another package is inevitable, but the US needs to treat lightly with where the funds are divided up. This could hurt or help our economy (3 years). I believe with the policies in place they are still awaiting for the election results to see when another package will happen. With the Q3 results of GDP, we are on a slow drive to bring the economy back up, we will need a boost to bring it back to where it was.

Article: What could additional fiscal policy do for the economy in the next three years?

https://www.brookings.edu/research/what-could-additional-fiscal-policy-do-for-the-economy-in-the-next-three-years/

E-mail me when people leave their comments –

You need to be a member of UNH Economics Collective to add comments!

Join UNH Economics Collective