Japan’s Fiscal & Monetary policy

Published by Dana Maher

30 November 2016

Japan’s economy is the 3rd largest in the world concerning the Nominal GDP and 4th largest concerning purchasing power, and it’s considered one of the most developed and flourished economies in the world. The ministry that is responsible for regulating monetary and fiscal policy with the help of the government is the ministry of finance. The ministry of finance is responsible to  keep the economy in a good format and to fulfill a steady, stable growth and promote economic growth, by  allocating resources, distributing  income and wealth among the citizens, by critically managing the government expenditure, taxes, and debt, and by setting certain rules, policies, and regulations that should be obeyed. Will can this growth be affected by the fiscal and monetary policy? What if a disaster occurs or the economy enters a phase of contraction how will the fiscal and monetary policy apply?

The role of the ministry of finance is very important in Japan, whenever there’s a problem related to fiscal or monetary policies with the help of the government they intervene and fix it. When Japan went through a tragical time during world war 2,  in which resources were scarce, investments and consumptions decreased, unemployment rate and budget deficit increased, prices, taxes and interest rate we’re very high(inflation),  that people couldn’t afford to pay their debts or borrow loans; the economy of japan went through a terrible period in which the economy of japan was at it’s lowest level, thus  the ministry of finance and the government intervened in order to boost economic growth by increasing government spending, decreasing taxes and interest rates, lowering budget deficit, so people start recovering and enter  a phase of recovery; in which there is low unemployment rate, high production, and they start taking loans, investing more, and spending; which lead to a steady economic growth.

During the postwar period the economy went through a miracle after the ministry of finance and the government intervened to sustain economic growth in which Japan’s economy fluctuated and become the 2nd country with the largest economy in the world

Last but not least both fiscal and monetary policies are regulated by the government and might affect the economic growth negatively or positively depending on the decision made by the ministry of finance and the government.

Japan Fiscal Plan Gives $45 Billion Spending Boost This Year

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