ADM 614 week 6 DQ 2

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Fiscal stimulus entails a series of events undertaken to regain normalcy in the economy. It is usually meant to tame a wild economy, especially one spiraling to danger zones. Fiscal stimulus is a short-term solution since it has an immediate remediating effect to the economy. Furthermore, it is applied in instances where other solutions would take time, and probably not have the desired effect on the economy. Nonetheless, the use of fiscal stimulus in economic recovery has limits. One, it cannot be used for the long-term, since it would result in imbalances in the ledger, causing a reduction in administrative savings (Elwell, 2010). In so doing, its application would be counterproductive, as it would stimulate the economy, and then bring it back down after that. Since the fiscal stimulus is meant at enabling the Fed to sustain the economy at an ideal through specific policies, long-term use of fiscal stimulus would cause increased borrowing from foreign sources, to maintain this state of the economy.

Fiscal stimulus is a practical way of initiating the recovery of the economy. It sets precedence for other techniques which are later employed for the long-term. America is in a terrible economic shape, although not at its worst. The adverse effects of the Great Recession and other economic hiccups in between are still evident in the present day (Levine, 2010). The sheer size and complexity of the country’s economy make it impossible for it to be rectified via a single approach. That way, fiscal stimulus may not efficiently trigger economic recovery. Nonetheless, its employment in the early stages increases improvement by activating the regaining process (Heim, 2016). After fiscal stimulus initiates the recovery, other means are used to foster economic growth so as to maintain the situation. The means are meant for boosting economic growth, to provide the government with funds necessary to balancing the idealization of the economy. Failure to do so, imbalances cause the government to seek alternative funding.

Bibliography

Elwell, C. (2010). Economic Recovery: Sustaining U.S. Economic Growth in a Post-Crisis Economy. Ft. Belvoir: Defense Technical Information Center.

Heim, J. J. (2016). Crowding Out Fiscal Stimulus: Testing the Effectiveness of US Government Stimulus Programs. Cham: Springer International Publishing.

Levine, L. (2010). Unemployment and Economic Recovery. DIANE Publishing.