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Explain why the timing of fiscal policy may be more difficult than the timing of monetary...

Explain why the timing of fiscal policy may be more difficult than the timing of monetary policy.

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Answer #1

The timing of fiscal policy may be more difficult than the timing of monetary policy because:

  • Decision-making body of fiscal policy is large, and it takes much time to arrive at a mutual decision. For fiscal policy decisions, the president and members of congress should have a majority. Whereas, in monetary policy, there is a committee of 12 members who take decisions regarding the monetary policies. And because it has a lesser number of members, it manages to make decisions quickly.
  • Time of implementation in fiscal policy is more than monetary policy. For example, if fiscal policy is to charge purchases of the government, then it may take time to plan purchases, plan the bid to purchases, and then finally implementation process begins Whereas, implementation of monetary policy begins much quicker.

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