Fiscal policy needs to complement the monetary policy stance, as are structural reforms across different sectors, including those necessary to complete the architecture of the Economic and Monetary Union(EMU),” it said.
(3) The two leaders agreed that they should avoid excessive fluctuations in foreign currency markets and that it would be necessary to effectively generate demand through the flexible fiscal policy, while advancing structural reforms.
Today, we reviewed the achievements of the economic and fiscal policies over the last six years- the so-called Abenomics, and then discussed the Council's agenda for the first half of this year.
Measures to take on individual credit risk such as corporate debt are extraordinary steps for a central bank since they come close to the area of fiscal policy which deals with resource allocation at the micro level.
Effective and coordinated near-term support from monetary and fiscal policies, combined with income policies to spur wage-price dynamics, is needed to reflate the economy.
The commitment in European Union countries to sound fiscal policies and continuing structural reform is key to the long-term success of EMU, and to improving the prospects for growth and employment.
If it means that central banks are directly underwriting government bonds, or managing monetary and fiscal policies as one, that would be prohibited in Japan as well as other advanced economies, as lessons from history tell us.
As I reported years ago, Jean-Claude Trichet, at that time the president of the European Central Bank, said that to complete the political integration of Europe, the fiscal policies of member states would be centralized.
The fiscal policy of the Federal Government and the monetary policy of the Deutsche Bundesbank will continue ensure a stable environment conducive to the expansion of domestic demand on a durable basis.
As an example of the role of fiscal policy in achieving price stability, a recovery in fiscal discipline has been traditionally considered important in stamping out hyperinflation in developing countries.
The Diet passed the government's fiscal policy strategy for the next 12 months with a rising fiscal deficit 100 per cent funded by credit from the Bank of Japan.
Promote adoption of measures to improve transparency in fiscal policy and public procurement, to improve the climate for investment and responsible use of government resources.
With respect to fiscal policy, or another pillar of macroeconomic policy, there have been times when significant stimulus measures have been taken since the early 1990s and they have had a certain effect in underpinning the economy.
A question naturally arises whether such a measure should be carried out as a fiscal policy measure by the Diet and the government in line with the decision-making process in a democracy.
This problem is shared by all countries that responded to the rapid economic deterioration with large-scale expansionary fiscal measures in the aftermath of the Lehman shock.
In general, monetary policies and those directed at competitiveness carry negative externalities, while fiscal policies and policies directed at stimulating domestic demand carry positive externalities.
However, given the huge outstanding amount of public debt in Japan, thoughtlessly increasing fiscal spending could damage public confidence in the conduct of fiscal policy.
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