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Title: The Implications of A Recessionary Trend in An Economy and The Role That Monetary Policy, Through Government Intervention, Helps Rectify The Same
Authors: Vivaan Pruthi
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Vivaan Pruthi Step By Step School Noida
MLA 8 Pruthi, Vivaan. "The Implications of A Recessionary Trend in An Economy and The Role That Monetary Policy, Through Government Intervention, Helps Rectify The Same." Int. j. of Social Science and Economic Research, vol. 9, no. 6, June 2024, pp. 1825-1839, doi.org/10.46609/IJSSER.2024.v09i06.014. Accessed June 2024. APA 6 Pruthi, V. (2024, June). The Implications of A Recessionary Trend in An Economy and The Role That Monetary Policy, Through Government Intervention, Helps Rectify The Same. Int. j. of Social Science and Economic Research, 9(6), 1825-1839. Retrieved from https://doi.org/10.46609/IJSSER.2024.v09i06.014 Chicago Pruthi, Vivaan. "The Implications of A Recessionary Trend in An Economy and The Role That Monetary Policy, Through Government Intervention, Helps Rectify The Same." Int. j. of Social Science and Economic Research 9, no. 6 (June 2024), 1825-1839. Accessed June, 2024. https://doi.org/10.46609/IJSSER.2024.v09i06.014.
References [1]. International Monetary Fund. (2011). Reserve accumulation and international monetary stability.https://www.imf.org/external/np/seminars/eng/2011/res2/pdf/fm.pdf [2]. Barro, R. J. (1968). Economic growth and convergence: An empirical note. American Economic Review, 58(1), 1-17.https://www.aeaweb.org/aer/top20/58.1.1-17.pdf [3]. McKinsey & Company. (n.d.). What is a recession?https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-a-recession [4]. Bank for International Settlements. (2013). The real effects of debt.https://www.bis.org/publ/work440.pdf [5]. Blanchard, O. (1993). The anatomy of the business cycle. National Bureau of Economic Research.https://www.nber.org/system/files/chapters/c0092/c0092.pdf [6]. Kuttner, K. (2014). Monetary policy during Japan’s great recession. Sasakawa Peace Foundation USA.https://www.spfusa.org/wp-content/uploads/2015/01/Paper_Monetary-Policy-during-Japan%E2%80%99s-Great-Recession_Kuttner-20140530.pdf [7]. International Monetary Fund. (2022). Global financial stability report.https://www.elibrary.imf.org/view/journals/001/2022/170/article-A001-en.xml [8]. Federal Reserve History. (n.d.).https://www.federalreservehistory.org/
ABSTRACT: This paper delves into the different consequences of a recession and economic downturns through different case studies such as the lost decades in Japan and the Stock market crash in the USA in 2007. Moreover through these case studies the paper establishes a link between financial markets and monetary policy as most recent recession have either been caused by financial crisis or have been preceded by them."As such it explores how the prevalent theoretical framework of monetary policy during the times of Friedman, which tasked monetary policy with fluctuating short term interest rates to meet inflation targets and further be stable in the long term to foster economic growth and feed consumer expectation, has now been usurped by governments to act as a stabiliser of economic downturns such as a recession. Through these case studies it offers a critique of recent expansionary policies undertaken in Japan that have often ignored the long time gap inconsistency problem of Japan which has lead to unconventional yet inconsistent monetary actions in Japan being unable to solve the recession. This critique is furthered through its comparison tot he actions of the FED that suggest monetary policy is best used aggressively over the long term to foster consumer expectations and thus return confidence in the economy and the credit system after a recession. This is supported by different IMF investigations discussed in the paper which reveal the importance of aggressive monetary policy with the support of fiscal stimulus to best solve a recession. Finally this paper then seeks to determine the implications of a recessionary trend in an economy and the role that Monetary policy, through government intervention, helps rectify the same.

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