Economics Assignment: An Annotated Bibliography on Public Policy Issues

Question

Task: This Annotated Bibliography assignment will introduce you to the process of identifying, recording, and annotating sources for later use

Economics Assignment Topic
Economic policy is, in many ways, the centerpiece of other types of public policy, because it represents the ways in which the State is willing to spend money on various policy initiatives, to include fiscal and monetary policy. In this sense, policy debates involve more than just a discussion of a particular policy intervention, but also the greater question of the extent to which the State should be involved in the economy as a whole. In this assignment you are expected cover the following:

Define and discuss fiscal and monetary policies.

Evaluate the key debates in fiscal and monetary policy, especially in the context of the USA.
Discuss key failings of the State in the areas of fiscal and monetary policy.
Evaluate the above with a biblical model of government and statesmanship.

Instructions
For this economics assignment, you are required to write an Annotated Bibliography in which you:

Identify at least ten sources that are relevant to an economic public policy issue that you may be interested in researching for your dissertation.

State and briefly describe, in a few sentences, the public policy issue you intend to explore in this assignment.

Annotate each source with a summary of at least 50 words. Each annotation should state the central thesis of the source being cited. Each annotation should explain how the source’s author(s) support their thesis. Each annotation should evaluate the relevance or applicability of the source to your research interest.

Answer

Article 1: Bergquist, P., Mildenberger, M., & Stokes, L. C. (2020). Combining climate, economic, and social policy builds public support for climate action in the US. Environmental Research Letters, 15(5), 054019.

According to the article by Bergquist, Mildenberger& Stokes (2020) undertaken in the economics assignment, the economic public policies have a significant role to play in the country. The threat to the climate has to be dealt seriously by the governments. To cater to this issue, the government has to formulate and implement strict climate policies. The climate policies are a part of the larger economic public policies as they are linked to many economic and social provisions or reforms. The aim of this paper is to show how the advocates and politicians can combine the climate policies with the socio-economic reforms to derive better outcomes. This article is useful as itshows that when the government uses its fiscal policies to align the socio-economic reforms with climate policies, it gets the support from the public for carrying out climate actions. The article concludes that economic and social reforms like providing affordable facility for housing, job guarantee, minimum wage of $15, etc. help in getting the support of the public in mitigation of climate threat. Therefore, the U.S government has to modify its fiscal policies to increase spending on public welfare to enhance the climatic conditions. ?

Article 2: Bernanke, B. S. (2020). The new tools of monetary policy. American Economic Review, 110(4), 943-83.

As per the article of Bernanke (2020), monetary policies are a significant part of economic public policy and there are some new tools developed for enhancing the impact of monetary policies on the economy. The Federal Reserve of the U.S has tried to overcome the shortcomings of the monetary policies followed traditionally. It has imposed lower bounds on the interest rates of short-term periods. The aim of the article is to review the latest monetary policy tools of Fed like quantitative easing (QE) along with forward guidance.To address to the failings of monetary policies, the U.S government has introduced new tools.The article is useful as it evaluates how the new tools have proved to be more effective in improving the financial situation of the U.S. If Fed maintains the interest rate neutrally between 2 to 3 percent along with forward guidance and QE, it would generate 3% policy space points. To conclude, the new tools should be made a part of the standard toolkit of the central bank and should be backed by better fiscal policies and slight rise in inflation target, for better stabilisation of the economy.

Article 3: Sacht, S. (2021). The tale of the donkey and the elephant: an estimated optimal fiscal policy rule for the US. Applied Economics Letters, 1-4.

As per the article by Sacht (2021), like any other country the United States aims at formulating an optimal fiscal policy. The aim of the article is to show how the government of the U.S is trying to minimise the economic fluctuations by formulating effective fiscal policies. The article is useful as it reflects upon the fiscal measures that the U.S has taken to overcome the primary deficit and the output gap that was created in the period after the World War II. The article suggests that as per the estimations of the Bayesian, the democratic presidencies that were predominant in U.S gave lesser weightage to the stabilisation of output gap. The republican presidencies, however, emphasized on bridging the output gap. On the other hand, compared to the republicans, the democratic presidencies had been more efficient in maintain the primary deficit at zero. The author concludes that the fiscal rule for U.S is time consistent and the government has a countercyclical response when it comes to the fluctuations in the GDP. ?

Article 4: Aldama, P., & Creel, J. (2017). Fiscal policy in the US: Ricardian after all? (No. 2017-23). ObservatoireFrancais des ConjoncturesEconomiques (OFCE).

According to the article by Aldama& Creel (2017), there have been instances when the constraints of the inter-temporal budget of the U.S government have been violated by its fiscal policies. The debts incurred and the primary surplus of the U.S proves the presence of fiscal regimes. The article aims at investigating whether the presence of the unsustainable local regimes jeopardize the U.S public debt’s sustainability. The author has applied a sustainability test of Regime-Switching Model. This provides adequate evidence on fiscal policies’ regime switching. The article is useful as it suggests that the presence of unsustainable local fiscal regimes could allow the global sustainability of the fiscal policies of U.S through an optimal regime switching. Despite the persistent and periodic fiscal regimes, which are unsustainable, the author concludes by indicating the presence of Ricardian fiscal policy in U.S. ?

Article 5: Faria-e-Castro, M. (2020). Fiscal policy during a pandemic. FRB St. Louis Working Paper, (2020-006).

As per the article of Faria-e-Castro (2020), the sudden outbreak of the global pandemic, Covid-19 has impacted almost all the countries across the world. The economies have been experiencing moderate to high level of recession. The aim of this article is to evaluate how the United States have used their fiscal tools to stabilise the economic conditions in the Covid-19 situation. The author uses a DSGE model of non-linear type. The article is useful as it investigates how the spread of corona virus has ceased all services that are contact intensive and how these have led to a deeper recession. The various fiscal policies of the U.S have been analysed here using the DSGE model’s calibrated version. The article suggests that the UI as a fiscal tool is very effective and helps in income stabilisation for the borrowers. The Covi19 recession has hit the borrowers the hardest while the savers are secured. The U.S government has formulated some liquidity assistance programs so that the rising unemployment in the adversely affected areas could be controlled. ?

Article 6: Summers, L. H., & Rachel, L. (2019, March). On falling neutral real rates, fiscal policy and the risk of secular stagnation.In Brookings Papers on Economic Activity BPEA Conference Drafts, March (pp. 7-8).

In the article by Summers & Rachel (2019), it has been stated that in the industrial world the neutral real interest rates would have fallen massively if the fiscal policies had not been implemented. In fact, the rates could have declined to negative. The authors aim at investigating how the neutral real interest rates for the different industrial economy blockscanbe estimated. The article assumes complete mobility of capital between the economies as well as less fluctuations in their current accounts. The article uses econometric tools to analyse the direct indicators of the market to understand the real interest rates. The article is useful as it suggests that the neutral real interest rates over the previous generation have reduced by almost 300 basis points. The article concludes that the change in neutral real interest rates have affected the propensity to save and invest. The government of U.S has incurred larger debts to raise the real rates, it has aided the old age pension schemes and healthcare insurances. The U.S aims at promoting higher private saving and further investment to maintain full employment and hit the desired inflation targets. ?

Article 7: Nikiforos, M., &Zezza, G. (2018). 'America First,'Fiscal Policy, and Financial Stability (No. sa_apr_18). Levy Economics Institute.

As per the article of Nikiforos&Zezza (2018), the economy of the U.S has been striving to recover fast in the period of post-war. However, its recovery has been the slowest and longest. This article aims at carrying out a strategic analysis of the challenges, prospects and contradictions over the medium run in the U.S economy. The macroeconomic stock flow consistent model of Levy Institute has been used here. The year 2018 has been taken as the baseline with no changes in tax or budget so that the impact of the tax bill of recent times can be omitted. The plans of expansion in public infrastructure to compensate the tax cuts have not been considered in the article. The effect of the omnibus bill and Bipartisan Budget Act with increased spending has also been disregarded for the study. The article is useful as it suggests that stock market drops lead to deleveraging of private sector. Finally, it concludes that new tax law and increased spending by federal government attribute the temporary increase in the GDP growth. However, this is likely to be overshadowed by the financial sectors’ crisis. ?

Article 8:Fenelon, A., &Mawhorter, S. (2021). Housing affordability and security issues facing older adults in the United States. Public Policy & Aging Report, 31(1), 30-32.

In the article ofFenelon&Mawhorter (2021), it has been analysed how over the last thirty years the increasing cost of housing has surpassed the rise in the incomes of the households in U.S. The economic public policies are imperative to support housing so that the people can afford it. The rising older adult population also needs public services for a better standard of living. The older people have security issues, which the government has to cater to in some ways. However, the article also states that as most of the older people have their own houses, they are free from the burden of rising housing costs and are also secured at their homes. The article is useful as it shows that the government initiatives for housing could reduce the problem of steeply rising cost of housing.

Article 9:Quinn, S. (2017). “The miracles of bookkeeping”: How budget politics link fiscal policies and financial markets. American Journal of Sociology, 123(1), 48-85.

According to Quinn (2017), there is a relation between national financial markets and the fiscal institutions. The aim of the article is to investigate the relation that has been paid least attention in national budgets’ structuring. The U.S case study has been used to study this relation. The battle between Johnson administration and federal government over the sale of assets and planning of budget for reorganising the housing finance policy of U.S has been evaluated. In the earlier times, the securitization market of U.S used liberalization and financial engineering as tools to prevent wealth redistribution. The article is useful as it gives insight to fiscal sociology by revealing the significant relationship between financial and fiscal systems through interaction. ?

Article 10: Monasterolo, I., &Raberto, M. (2018). The EIRIN flow-of-funds behavioural model of green fiscal policies and green sovereign bonds. Ecological Economics, 144, 228-243.

As per Monasterolo&Raberto (2018), the financial instruments along with fiscal and monetary policies have a crucial role to play in formulating any national or international agreement. The article aims to highlight the effect of changes the introduction of green fiscal policies on the firms’ ability to invest in green and brown sectors. The EIRIN behavioural model of flow of funds is utilised here. These fiscal policies impact the bond and credit markets and unemployment. The article is useful as it uses the simplified balance sheet approach. It assumes no production factors’ substitution. The green fiscal policies have a distributive impact on the economy and green sovereign bonds have win-win effect. It concludes that public policies foster green growth.

References
Aldama, P., & Creel, J. (2017). Fiscal policy in the US: Ricardian after all? (No. 2017-23). ObservatoireFrancais des ConjoncturesEconomiques (OFCE).

Bergquist, P., Mildenberger, M., & Stokes, L. C. (2020). Combining climate, economic, and social policy builds public support for climate action in the US. Environmental Research Letters, 15(5), 054019.

Bernanke, B. S. (2020). The new tools of monetary policy. American Economic Review, 110(4), 943-83.

Faria-e-Castro, M. (2020).Fiscal policy during a pandemic. FRB St. Louis Working Paper, (2020-006).

Fenelon, A., &Mawhorter, S. (2021). Housing affordability and security issues facing older adults in the United States. Public Policy & Aging Report, 31(1), 30-32.

Monasterolo, I., &Raberto, M. (2018).The EIRIN flow-of-funds behavioural model of green fiscal policies and green sovereign bonds. Ecological Economics, 144, 228-243.

Nikiforos, M., &Zezza, G. (2018). 'America First,'Fiscal Policy, and Financial Stability (No. sa_apr_18). Levy Economics Institute.

Quinn, S. (2017). “The miracles of bookkeeping”: How budget politics link fiscal policies and financial markets. American Journal of Sociology, 123(1), 48-85.

Sacht, S. (2021). The tale of the donkey and the elephant: an estimated optimal fiscal policy rule for the US. Applied Economics Letters, 1-4. Summers, L. H., & Rachel, L. (2019, March). On falling neutral real rates, fiscal policy and the risk of secular stagnation.In Brookings Papers on Economic Activity BPEA Conference Drafts, March (pp. 7-8).