Fiscal dominance Assignment Essay

Fiscal dominance Assignment Essay

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Fiscal dominance Assignment Essay

What is fiscal dominance?

Fiscal dominance is a situation in which the government’s demand for funds crowds out private investment. This can happen when the government borrows too much money, which drives up interest rates and makes it more expensive for businesses to borrow. As a result, businesses may be less likely to invest, which can lead to slower economic growth.

How does fiscal dominance work?

Fiscal dominance can be thought of as a game of chicken between the government and the private sector. The government wants to borrow money to finance its spending, but the private sector also wants to borrow money to invest. If the government borrows too much money, it will drive up interest rates, which will make it more expensive for the private sector to borrow. As a result, the private sector may be less likely to invest, which will slow down economic growth.

What are the causes of fiscal dominance?

There are a number of factors that can contribute to fiscal dominance, including:

• High government debt: A government with a high level of debt is more likely to crowd out private investment, as it will need to borrow more money to finance its spending.
• High interest rates: High interest rates can also make it more expensive for businesses to borrow, which can lead to lower investment.
• Weak fiscal institutions: Weak fiscal institutions can make it more difficult for the government to control its spending, which can lead to higher debt and higher interest rates.

What are the effects of fiscal dominance?

The effects of fiscal dominance can be severe, including:

• Lower economic growth: Lower investment can lead to lower economic growth, as businesses will be less likely to expand or create new jobs.
• Higher inflation: Higher interest rates can lead to higher inflation, as businesses will pass on the higher costs of borrowing to consumers.
• Financial instability: Fiscal dominance can lead to financial instability, as the government may be forced to default on its debt or impose austerity measures, which can lead to a recession.

How can fiscal dominance be avoided?

There are a number of steps that can be taken to avoid fiscal dominance, including:

• Managing government debt: The government should aim to keep its debt levels under control. This can be done by raising taxes, cutting spending, or a combination of both.
• Keeping interest rates low: The government can help to keep interest rates low by maintaining a sound fiscal policy and by having strong central banks.
• Strengthening fiscal institutions: The government should strengthen its fiscal institutions, such as its budget process and its debt management agency. This will help to ensure that the government is able to control its spending and avoid excessive debt.

Conclusion

Fiscal dominance is a serious problem that can have a devastating impact on an economy. It is important for governments to take steps to avoid fiscal dominance, such as managing their debt levels, keeping interest rates low, and strengthening their fiscal institutions.

Additional information

• Fiscal dominance in India: India is a country that is particularly vulnerable to fiscal dominance. This is due to a number of factors, including a high level of government debt, high interest rates, and weak fiscal institutions.
• Types of fiscal policy: There are three main types of fiscal policy: neutral, contractionary, and expansionary. Neutral fiscal policy is designed to keep the economy at full employment. Contractionary fiscal policy is designed to slow down the economy, while expansionary fiscal policy is designed to speed up the economy.

Fiscal dominance Assignment Essay

RUBRIC QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points:  Student failed to submit the final paper. 20 points out of 50:  The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50:  The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately.  Elements of the required response may also be lacking. 40 points out of 50:  The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples.  The answer is complete. 50 points:  The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples.  No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points:  Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points:  Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points:  References to scholarly sources are occasionally given; many statements seem unsubstantiated.  Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points:  Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented.  APA 6th Edition is used with only a few minor errors.  There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points:  Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented.  APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points:  Student failed to submit the final paper. 5 points out of 20:  The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors  10 points out 20:  The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20:  The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points:  The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points:  Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements.  The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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