Increasing Economic Spending by the American Government as a means to steer employment generation after the Covid-19 Pandemic: Annotated Bibliography
The recent Covid-19 pandemic has caused a lot of disruption to different economies across the world. America in particular has emerged to be the most affected nation as seen in the high number of people affected and fatalities realized from the disease. Another key area of concern is that the adverse effects of the disease would greatly affect the economy. To lower the disease’s spread, both the Federal and State governments have put in place several measures that limit social interactions. Some of the measures include discouraging social gatherings, placing people into quarantine facilities, and encouraging people to stay at home. The need to avoid social distancing has led to some organizations restricting the number of people who can work for them. Also, the quest to avoid social gatherings has seen businesses affected as people shun away. There is no doubt that the pandemic has resulted in loss of jobs for many Americans. A great understanding of different macroeconomic theories that encourage government spending will be critical for explaining America’s cause of actions that will result to increase in government spending. The research thus looks at the different measures the American government can take to recover from the pandemic and realize economic growth that will generate employment opportunities for the American citizens.
Annotated Bibliography
Bibow, Jorg. Keynes on monetary policy, finance, and uncertainty: Liquidity preference theory and the global financial crisis. Routledge, 2013.
The book talks about the importance of the Keynesian theory in explaining different economic events. In particular, it focuses on the 2007-2008 financial crisis. International financial organizations were depicted as facing financial turmoil that resulted in a recession. The origins of the financial turmoil were linked to the United States. The American mortgage industry was highlighted as being supported by a market boom that had relied on large debts. Uncertainties in the industry resulted in equity sellers selling their securities unfavorably thus sending panic into the market. The situation led to many financial institutions and banking organizations feeling the weight of the recession which seemed to threaten their survival. The American government was called upon to intervene in the case of its local business and economy. Even without the calling, the government felt obliged to protect its financial industry whose failure would have led to the total economic collapse of the nation. The American Congress passed the “Troubled Asset Relief Program.” The program was meant to cushion business entities from the adverse effects of the recession by giving them loans to operate during the turmoil. Likewise, the Federal Reserve embarked on the move to purchase commercial papers. The commercial papers were depicted as critical elements that allow corporates to operate effectively. Buying the paper was thus seen as a means to prevent them from going to the hands of individuals thus limiting their access to corporates. The above measures depict the usefulness of the Keynesian theory in allowing governments to empower their economies. The move by the American government to ensure continued spending by giving financial institutions loans to carry on with their activities proved effective in curbing the financial crisis that had rocked the nation.’
Coddington, Alan. Keynesian Economics. Routledge, 2013.
The book discusses the various aspects of the Keynesian economic theory. The theory explains how global events such as depression affects a country’s economic growth. The book takes a brief overview of the different factors that lead to economic depression and the corrective measures governments can take to rectify the situation. The theory focuses on the economy’s total spending as a factor that is greatly affected by global economic events. Adverse economic activities are highlighted as interfering with the government and citizen’s spending capabilities. Reduced economic spending leads to decreased output. Business organizations are not able to sell their products. The poor business performance on the part of economic entities thus results in low revenue collection by the government. Failure by the government to meet its revenue obligations, therefore, means that it will not be able to meet its spending obligations thereby affecting all organizations that depend on government funding for operations. The repercussions of the events are seen in reduced output across many sectors of the economy and rising inflation. Keynesian economics demand that governments increase their spending during instances of global depression. The act will avail the citizens with the necessary capital needed for spending hence supporting business operations. Likewise, the theory advocates that governments lower taxes during such periods to encourage businesses to continue with their operations.
Gottschalk, Jan. Keynesian and monetarist views on the German unemployment problem: theory and evidence. No. 1096. Kiel Working Paper, 2002.
The article investigates the German unemployment issues in the early 2000s. To provide a better understanding, the researchers choose to look at the issue from the monetarist and Keynesian model approaches. The monetarist theory focuses on the nation’s supply of money. The theory suggests that the central bank plays a huge role in regulating the economic situation of countries. Central banks are highlighted to control the supply of money in the economy. It is the amount of money in supply that determines the economic progress of a nation. The presence of more money in supply means that spending also increases. The citizen’s ability to spend more money, therefore, boots business operations due to the rising consumption of their products. Low money supply in the economy, on the other hand, is considered to cause adverse effects on the country’s economy making it stagnate. The fact that businesses are not able to realize better revenues makes them release some of their staff leading to unemployment. Likewise, high rates of inflation emerge due to a shortage of money supply in the economy. The Keynesian theory, on the other hand, seeks to explain the high unemployment rates in Germany from the lack of government spending approach. The theory investigates Germany’s spending during the years that were characterized by high rates of unemployment. It points out that the lack of spending meant that businesses failed and closed as people showed reluctance in buying. The effects of such actions was the closure of businesses which in turn lead to unemployment. Understanding Germany’s situation and relating it to the two theories was highlighted as the best way to know the root cause of the nation’s rising unemployment.
Miller, Chris. 2020. Foreign Policy Research Institute. The Effect of Covid-19 on Government Debt, Borrowing, and Spending.https://www.fpri.org/article/2020/04/the-effect-of-covid-19-on-government-debt-borrowing-and-spending/ Accessed July 13th, 2020
The article addresses the effects of the Covid-19 pandemic on the American economy. It points out that the disease has led to shortages in consumer spending across the country. The government’s measures to ensure that citizens take precautionary measures to avoid contracting the disease has led to a lot of people refraining from any acts of spending as individuals prefer to remain at home. The effects of reduced spending are seen in the government falling short of attaining targeted revenue collections. In particular, the disease is considered to have created a budget shortfall that was last witnessed during the World War. To adjust to the changing economic demand, the American government has decided to grow its debt to cushion its economy and that of its businesses from the adverse effects of the pandemic. The Congressional Budget Office (CBO) projects estimate that the nation’s budget will be 101% to that of the GDP in 2020. Likewise, it sets the debt level to grow to 108% towards the end of 2021. The large debt is meant to cater to the revenue shortages the country will realize from the conventional tax collection methods. Also, the American government is highlighted to offer different kinds of trade securities to fund the ballooning budget deficit. For instance, the United States Federal Reserve is portrayed to offer people different kinds of securities such as bonds at high rates which can only be compared to the World War.
Nicola, Maria, Zaid Alsafi, Catrin Sohrabi, Ahmed Kerwan, Ahmed Al-Jabir, Christos Iosifidis, Maliha Agha, and Riaz Agha. “The socio-economic implications of the coronavirus pandemic (COVID-19): A review.” International journal of surgery (London, England) 78 (2020): 185.
The article discusses the socio-economic fears that result from the Covid-19 pandemic. It states that the disease has led to fears of impending economic crises and recession due to its adverse effects on work. The number of people working has reduced as firms are required to adapt to new work regulations that discourage the spread of the disease. Likewise, some jobs have closed due to low demand for their products. The fact that many people have been sent home has resulted to a reduction in consumption as people do not have the money to purchase different products. The feared economic repercussions of the disease have led to people comparing it to the economic events during World War II. The fears seem to be driven by the government’s shutdown of labor provision, enactment of lockdowns, and quarantines which have made it hard for significant economic activities to take place.
Sklias, Pantelis, Spyros Roukanas, and Georgios Maris. “Keynes and the Eurozone’s Crisis: Towards a Fiscal Union?.” (2014).
The article talks about the Greek financial crises that threatened entire Europe’s economy. Before the Greece situation, other European nations that are highlighted as having faced financial challenges are Spain, Portugal, and Italy. The Greece crisis is however portrayed as persistent regardless of the various measures taken to restore the country to its original economic position. For instance, the article points to the European Union taking austerity measures to rectify the situation. Also, the union is portrayed as encouraging the existence of free-market conditions as a means of allowing the economy to restore itself into normalcy. The article, however, illustrates that it is such measures which had led to the deteriorating economic environment in Greece. In particular, the article states that the measures which the European Union had taken in addressing the situation violated Keynesian economic policies thus resulting in the failures. The region’s stakeholders are portrayed as having forgotten that it is the role of the government to enact policies that lead to economic development instead of leaving things to free-market conditions. The article thus points out that the European Union should enact policies that allow fiscal transfer failure to which the problem will reemerge and affect several countries across Europe.
Williamson, Stephen D. “Liquidity, monetary policy, and the financial crisis: A new monetarist approach.” American Economic Review 102, no. 6 (2012): 2570-2605.
The article provides a monetarist approach to the 2007-2008 financial crisis. It highlights that different intermediation of the economy and the financial system provides a better view of the global recession experienced during the year. The article point to liquidity playing a great role in influencing a country’s economic performance. Easy supply of money in the economy is highlighted as an encouragement to business entities to continue with their operation as more money is flowing in the economy meaning that people are willing to spend in purchasing various products. Financial frictions are highlighted as leading to turbulence in the open market. In such conditions, governments should focus their efforts on improving the money supply to the economy. Other courses of action such as the purchase of private assets by the central bank are portrayed to be irrelevant and cannot help the country recover from the difficult financial recession it faces. The article links the positive gains made by governments during the 2007-2008 government recession to the government’s acts to ensure more money is supplied in the economy. The survival of major financial organizations depended on their ability to meet their client’s needs for money and ensure a continuous supply. To beat the adverse effects of money shortages, the institutions relied on federal funding. The fund was channeled availed to the citizens using different monetary activities associated with financial institutions. Availability of money in the different financial markets thus restored confidence in people and at the same time giving them access to money which they could spend. The act by governments to give financial organizations money to continue with their activities thus lifting the economy from the financial recession.