Effectiveness Of Fiscal And Monetary Policies Essay

Effectiveness of fiscal and monetary policies to manage inflation, economic growth and exchange rate volatility in recent years in Kenya. Fiscal policy refers to government policies concerning taxes and government spending while monetary policy refers to all actions by the Central Bank to control the quantity of money supply and availability of credit in the economy. Fiscal and monetary policies play a critical role in influencing the pace at which an economy will grow and its capacity to deal with key challenges both endogenous and exogenous. Kenya faces various domestic policy challenges which include a high population growth rate, high unemployment rate, significant weaknesses in infrastructural capacity, inadequate levels of domestic savings and investments, and poorly capacitated counties to handle devolution. External challenges include security risks and spillover effects from other parts of the global economy. Fiscal and monetary policies affects the macroeconomic stability of the country and whether Kenya will transition into a middle income nation by 2030 as envisioned in vision 2030 through an annual econom ic growth rate of 10% p.a. These policies therefore need to be responsive in addressing these challenges as well as propel the country to economic growth while maintaining price stability. The country should therefore give priority to the following key areas. First, prudent and transparent county and national government spending. Of importance is allocating atShow MoreRelatedDo Fiscal and Monetary Policy Stimulate the Economy? Essays1467 Words   |  6 Pagesgovernment implements and enforces certain policies that apply to specific situations and circumstances. Such policies guide the government into influencing and controlling the direction of activity through borrowing, spending, and taxes. 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