Stimulating the Us Economy

Abstract

According to International Monetary Fund (2009) the recession in U.S started in 2007 and was brought under control in June 2009. However, the U.S is still suffering from the aftershock of this recession. This is why the economy is yet to fully recover; indeed some experts warn that if the government does not take appropriate measures then another recession may occur. This will mean that unemployment may as well increase since it is directly affected by recession. The decline in economic growth means that inflation and unemployment are on the rise, and consumers have little to spend. Therefore, there is need for the government to formulate and implement economic policies that can stimulate the economy. There are three basic things that can stimulate the economy; these are regulations, fiscal policy and monetary policy.

All sources and findings will be presented in a compare and contrast format against the subject matter to highlight the pre and post-recession conditions of the economy. Since a majority of the research is based on factual findings and statistical data gathered by multiple experts and sources over the period of time, the paper will exclude any personal opinions.

TABLE OF CONTENTS

Introduction............................................................................................................................4

Literature................................................................................................................................5

Regulatory Measures..................................................................................................5

Fiscal Policy...............................................................................................................7

Monetary Policy.........................................................................................................8

Methodology.........................................................................................................................11

Conclusion.............................................................................................................................12

References.............................................................................................................................13

Introduction

Atlas Insurance Company is a big American multinational company dealing in insurance services. The main business of the company is to provide insurance policies, which include private vehicles, commercial vehicles and even motorcycles; it also provides travelers insurance and life insurance. The company has created a very exceptional reputation about its insurance services, particularly America. However, the recent U.S financial crisis that saw the economy decline has negatively affected the company as the revenue of the company has considerably dropped due to losses and it has suffered. Accordingly, as the CEO of the company I write this letter to request the American government to undertake the three discussed measures to stimulate the economy.

Three things that the government should undertake to stimulate the economy

There are three things regarding the economy that the U.S government should apply to stimulate economic growth, as discussed in the paper, these include, fiscal policy, monetary policy and regulatory policy. Though, the impact and effectiveness of each of these measures might vary, many economists agree that they strongly impact the consumer as well as business behavior. These include the fiscal, monetary as well as regulatory powers the government has as enshrined in the constitution. The following section briefly explains these ways.

1. Regulatory measures

As the US emerges from the recent financial crisis that saw its economy slump, the government can use regulatory policy measures to stimulate its economy. As pointed out by Ahrend, et al. (2009) better regulation measures taken through deregulation and structural reforms can enhance economic growth. Ahrend, et al. (2009) adds that the significance of a strong regulatory structure in bringing in investment and innovation cannot be underrated. Accordingly a good regulatory structure can impact the economic growth in two manners:

* One, it positively affects market entry, by the government lowering barriers to entry, and reducing bureaucracy for new and existing businesses. At the same time, regulations can as well improve market exit, this could be through better regulations regarding bankruptcy. Consequently, the regulations can enhance market mechanisms as well as competition; this will result in higher productivity within the market and improved growth. According to Marvin (2007) regulations have the potential to reduce open up markets and completion and encourage best market results.

* Two, as noted by were regulations improves the confidence of investors in the country because they increase transparency and clarity. Likewise, they can reduce the risks and enhance investment for important facilities, especially in the main infrastructure sectors like energy, transport, telecommunication and water. A good regulatory policy system that improves transparency assists to foster trust and reduces the level of costs of doing business.

It has been explained by Marvin (2007) that structural and regulatory reforms and policies are an influential complement to fiscal and monetary policies in developing positive conditions to jumpstart the economic growth. Indeed, Marvin (2007) adds that a country's regulatory policies have a substantial impact on its economic growth. Particularly labor as well as product market policies are able to significantly affect structural unemployment, tendency in labor participation as well as labor productivity.

An effective and current regulatory policy framework remains critical to support any structural reforms. The recent financial crisis has brought the need for extra structural reforms, particularly in the financial sector, so that the economy can move in the right direction and markets can be stimulated.

However, the government has to remember that poorly formulated and executed regulations are bound not be followed. This in turn undermines the laid down rules and endangers the achievements of underlined policy objectives. Regulations that are formulated