Fiscal policy theory thesis

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The fiscal theory of the price level is the idea that government fiscal policy , including debt and taxes present and future, is the primary determinant of the price level or inflation as opposed to monetary theory. FTPL requires confidence the government will not default on its debts, but rather 'inflate away' debts. In nominal terms, government must pay off its existing domestic liabilities government debt denominated in local currency units either by refinancing rolling over the debt, issuing new debt to pay the old or amortizing paying it off from surpluses in tax revenue. In real terms, a government can also inflate away the debt: if it causes or allows high inflation, the real amount it must repay will be smaller.
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Fiscal Policy and the Goverment Theory Example | Graduateway

We use cookies to give you the best experience possible. Usually fiscal policy is about spending as much as possible, thereby stimulating the economy,without necessarily raising taxes. In other words Fiscal policy involves the Government changing the levels of Taxation and Govt Spending in order to influence Aggregate Demand AD and therefore the level of economic activity. The two main instruments of fiscal policy are government expenditure and taxation.
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Political philosophy is the strongest frame at providing an overall policy goal through its dialectic approach. However, it is the weakest of the five frames at providing technical details or a plan of action. Information processing counterbalances the major weakness of political philosophy by being the strongest technical frame since it provides prescriptions for the policy process Bobrow and Dryzek , The major weakness of information processing,…. Public Policy is determined and judged by a set of ideals held simultaneously by policy makers and by the public which judges a program.
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Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering.
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