Effectiveness of macroeconomic policies in the context of closed and open economies

• Authors: Kubendran N.
• Languages of publication: EN

Abstracts

EN

Monetary policy and fiscal policy are the two important macroeconomic policies which are used to achieve certain major macroeconomic goals like economic growth, unemployment reduction, counteract inflation and overall economic development of the nation. The effect of macroeconomic variables may differ in terms of degree, duration, different economic systems and under different exchange rate regimes. This study analyses the effectiveness of monetary policy and fiscal policy on the economy in terms of economic integration and different exchange rate regimes. Regression analysis in this study found that the fiscal policy is more effective in a closed economy and monetary policy is more effective in an open economy. Also the study finds that the fiscal policy is more effective under managed float exchange rate regime and monetary policy is more effective under perfectly flexible exchange rate. So this study also validated Mundell− Fleming model.

Keywords

EN

Closed economy; Economic growth; Exchange rate; Fiscal policy; Monetary policy; Open economy

• Publisher: Uniwersytet Ekonomiczny w Katowicach
• Journal: Journal of Economics and Management
• Year: 2016
• Volume: 25
• Pages: 30-47

Contributors

author

Kubendran N.

• School of Law. Alliance University

References

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Identifiers

ISSN

1732-1948