Fiscal Stimulus Assignment Example | Topics and Well Written Essays - 750 words

Fiscal Stimulus - Assignment Example The appreciation in the average hourly earnings also remained more or less fixed in the last six months, hovering around 10.5 percent (United States Department of Labor: Online). To improve the circumstances in the labor market, certainly some sort of a fiscal stimulus is imperative. Resorting to the monetary policy adjustments alone is not sufficient to rescue the current economic slowdown. The handling of the Japanese economy has proved beyond doubt that it is always wiser to intervene when the situation could still be rescued (Coy: Online). The economy is deteriorating at a fast pace and monetary measures alone will not be enough to restrain the current economic meltdown. This is an exceptional situation that validates opting for hitherto untried initiatives. The damage wrecked by the recessionary circumstances can be limited by a second fiscal stimulus. It was definitely wise on the part of the government to deal with the excess capacity by nudging the companies like GM and Chrysler into bankruptcy (Coy: Online). However such measures have worsened the unemployment situation. Hence, enhanced public expenditure is the only possible way to create more jobs. It could be said that the first fiscal stimulus failed to rescue the unemployment situation. Yet it is too early to analyze its impact. So a second fiscal stimulus is a step more on the side of caution and care. ... Augmenting fiscal deficit is a cause of concern. However, it is a phenomenon that could be managed and whose impact will be felt in the long run. By that time, the improved economic circumstances caused by the second fiscal stimulus will cushion the fallout of a high fiscal deficit. The immediate priority should be to rescue the credibility of the sinking markets and assuring the apprehensive investors. Dwindling credibility of Fed is often cited as a grave issue. The thing that needs to be kept in mind is that a fiscal stimulus should be seen as a measure that is aimed to extend first aid to the ailing economy and not as something that will be continually and irresponsibly repeated.Hence a second fiscal stimulus do stands an approval in the contemporary circumstances. However, care needs to be taken that the proposed bill is trimmed of all the expenditure to be diverted towards activities that will yield a harvest over a prolonged period and could be classified as non-productive in an immediate scenario. Total Words: 555 (2 pages and 55 words)Works Cited United States- Monthly Data. United States Department of Labor. Bureau of Labor Statistics. 13 Dec. 2009 http://www.bls.gov/eag/eag.us.htm Coy, Peter. "Do we Need a Second Fiscal Stimulus". Business Week. 7 July 2009. 13 Dec. 2009