MONETARY AND FISCAL POLICY- COMPARATIVE ANALYSIS

IN

DEVELOPED AND DEVELOPING ECONOMIES

B.A (HONS.) ECONOMICS

TERM PAPER BY : BILAL

OUTLINES • OBJECTIVE OF STUDY

• METHODOLOGY USED IN STUDY

• COMPARATIVE ANLYSIS OF DEVELOPED AND DEVELOPING ECONOMIES IN THE ASPECT OF MONETARY AND FISCAL POLICY

• ROLE OF MONETARY POLICY IN INFLATION TARGETING

• CONCLUSION

OBJECTIVE OF STUDY• TO FIND OUT THE DIFFERENCE IN INSTRUMENT OF MONETARY

AND FISCAL POLICY IN DEVELOPED AND DEVELOPING ECONOMIES.

• ROLE OF GOVRNMENT AND CENTRAL MONETARY AUTHORITY TO CONTROL MONETARY AND FISCAL POLICY IN DEVELOPED AND DEVELOPING ECONOMIES

• TO FIND OUT THE VARIABLE TARGET BY MONETARY AND FISCAL POLICY IN DEVELOPED AND DEVELOPING ECONOMIES.

METHODOLOGY USED IN STUDY

• THE METHOD THAT I HAVE USED IN MY STUDY WAS: EXPLORATORY RESEARCH AND BASED ON: SECONDARY SOURCE OF DATA LIKE NEWS PAPER, MAGAZINE, INTERNET, , CENTRAL BANK

COMPARATIVE ANLYSIS OF DEVELOPED(U.S) AND DEVELOPING(INDIA) ECONOMIES IN THE ASPECT OF MONETARY AND FISCAL POLICY

• DEVELOPED ECONOMIES HAVE HIGHER DEGREE OF GROWTH VARIABLES SUCH AS: PER CAPITA INCOME GDP( GROSS DPMESTIC PRODUCTION) LEVEL LEVEL OF INDUSTRIALIZATION GENERAL STANDARD OF LIVING AMOUNT OF WIDESPREAD INFRASTRUCTURE NON- ECONOMIC FACTOR( HDI, LITERACY LEVEL, HEALTH, ETC)

DEFINITION OF DEVELOPING(INDIA) ECONOMIES

• DEVELOPING ECONOMIES HAVE LOW DEGREE OF GROWTH VARIABLE SUCH AS: PER CAPITA INCOME GDP( GROSS DPMESTIC PRODUCTION) LEVEL LEVEL OF INDUSTRIALIZATION GENERAL STANDARD OF LIVING AMOUNT OF WIDESPREAD INFRASTRUCTURE NON- ECONOMIC FACTOR( HDI, LITERACY LEVEL, HEALTH, ETC)

MONETARY POLICY IN DEVELOPING(INDIA) ECONOMIES

• MONETARY POLICY: is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the

demand side economic policy used by the government of a country to achieve macroeconomic objectives like.

- Inflation - consumption,

- growth and liquidity

OBJECTIVE OF MONETARY POLICY IN

DEVELOPING(INDIA) ECONOMIES

• NEUTRALITY OF MONEY: INCREASE AND DECREASE IN SUPPLY OF MONEY, EFFECT SHOULD BE NEUTRAL.

• PRICE STABILITY: IN MONETARY POLICY WE CONTROL INFLATION BY THE USE OF INFLATION TARGETING.

• STABILITY OF EXCHANGE RATE: INFLOW AND OUTFLOW OF CURRENCY SHOULD NOT AFFECT TO EXCHANGE RATE. DURING INFLOW OF CURRENCY IN ECONOMY RBI ADOPT THESE TECHNIQUES: 1- TO EXPAND THE CREDIT IN ECONOMY 2- TO EXPAND THE CURRENCY LEVEL IN ECONOMY VICE VERSA DURING OUTFLOW OF CURRENCY.• FULL EMPLOYMENT

• ECONOMIC GROWTH. BACK

TARGET VARIABLE OF FISCAL POLICY IN DEVELOPING(INDIA) ECONOMIES

DEVELOPMENT OF INFRASTRUCTURE

BETTER ALLOCATION OF RESOURCES PUBLIC SECTOR AND KEY INDUSTRIES EMPLOYMENT OF IDLE ECONOMIC RESOURCES

POVERTY ALLEVIATION PROGRAMMES

NEXT

INSTRUMENT OF MONETARY AND FISCAL POLICY IN DEVELOPING(INDIA) ECONOMIES

MONETARY POLICY FISCAL POLICY

BANK RATE PROGRESSIVE TAXATION

REPO RATE PUBLIC EXPENDITURE

SLR(STATUTORY LIQUIDITY RATIO) PUBLIC DEBT

CRR(CASH RESERVE RATIO) DEFICIT BUDGETARY POLICY

OPEN MARKET OPERATION(OMO) NEXT

OBJECTIVE OF MONETARY POLICY IN DEVELOPED(U.S) ECONOMIES

• INNOVATION: IN DEVELOPED ECONOMIES THE OBJECTIVE OF MONETARY POLICY TO PROMOTE INNOVATIVE IDEAS BY THE USE OF LOWER INTEREST RATE TO PROVIDE FUND.

• INCREASE IN REAL GDP: TO INCREASE IN THE LEVEL OF REAL GDP WE NEED TO: 1- DISINFLATION PLOICY 2- INCREASE IN REAL OUTPUT 3- PROMOTE ENTREPRENEURSHIP

• STABILITY OF EXCHANGE RATE: TO MAKE THE EXCHANGE RATE MORE STABLE BY EFFECTIVE USE OF FOREIGN POLICY.

• DECREASE THE INEQUALITY BETWEEN SECTOR: BY THE USE OF MONETARY POLICY INSTRUMENT I.E CREDIT RATIONING TO DECREASE THESE INEQUALITIES.

• TRANSFORMING FROM ONE SECTOR TO ANOTHER: CONCLUSION

TARGET VARIABLE OF FISCAL POLICY IN DEVELOPED(US) ECONOMIES

RESEARCH AND DEVELOPMENT ACTIVITIES

DEVELOPMENT OF CAPITAL INTESIVE INDUSTRY

INFLUENCE OF BACKWARD AND FORWARD LINKAGES CONCLUSION

INSTRUMENT OF MONETARY AND FISCAL POLICY IN DEVELOPED(U.S)

ECONOMIES

MONETARY POLICY FISCAL POLICY

RESERVE RATIO REGRESSIVE TAX SYSTEM

DISCOUNT RATE LOW LEVEL OF PUBLIC EXPENDITURE

OPEN MARKET OPERATION INTEREST EARNING

SURPLUS BUDGET POLICY CONCLUSION

CONCLUSIONMONETARY POLICY DEVELOPING ECONOMIES(INDIA) DEVELOPED ECONOMIES(U.S)

OBJECTIVES DIFFERENT BACK

DIFFERENT

TRAGET VARIABLE SOME ARE SAME BUT OTHER ARE DIFFERENT

SOME ARE SAME BUT OTHER ARE DIFFERENT

INSTRUMENT ARE SIMILAR BACK

ARE SIMILAR

FISCAL POLICY DEVELOPING ECONOMIES(INDIA) DEVELOPED ECONOMIES(U.S)

TARGET VARIABLE ARE DIFFERENT BACK

ARE DIFFERENT

INSTRUMENT DIFFERENT BACK

DIFFERENT

QUESTION?

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