Fiscal Policy Emerges as Powerful Tool for Economic Stability
The article discusses how the importance of monetary policy has increased compared to fiscal policy in the past twenty years. Monetary policy now focuses on setting interest rates instead of controlling money supply. The shift towards targeting inflation has raised questions about the effectiveness of monetary policy. However, when considering real-world evidence, it appears that monetary policy may not be as powerful as previously thought. The study suggests that fiscal policy, under certain conditions, remains a strong tool for managing the economy.