As the global economy slowly recovers, legislators are looking to improve economic conditions in their respective countries. There are several financial policies that could be implemented to achieve this goal.
In this article, we will discuss five financial policies that legislators should consider as the global economy recovers from the Covid 19 impact.
1. Increase Government Spending
One of the most effective ways to stimulate economic growth is to increase government spending. This can be done in several ways, such as by increasing public investment in infrastructure or by providing tax breaks and subsidies to businesses.
The main benefit of increased government spending is that it increases the overall demand for goods and services. This, in turn, leads to an increase in production and employment.
2. Reduce Personal Income Taxes
One reason for this is that high levels of taxation can lead individuals to spend less money on consumption, which will negatively affect the economy in many ways.
For example, lower levels of consumption lead businesses to produce fewer goods and services due to decreased demand from consumers. This results in companies laying off workers or cutting back the hours they work.
3. Reduce Corporate Tax Rates
This helps because it allows companies to keep more money and reinvest it into their business, which will lead to higher levels of economic activity overall.
Lowering taxes also create an environment where businesses can flourish without being hampered by high levels of taxation on their profits or capital gains from investments that they make over time.
4. Increase the Availability of Credit
When businesses have access to credit, it allows them to expand their operations and hire more workers. It also allows them to purchase new equipment or supplies that they need to grow.
On the other hand, when consumers have access to credit, it allows them to buy goods and services that they otherwise would not afford. This can help boost economic growth by increasing the overall demand for goods and services.
5. Increase the Minimum Wage
This is important because it helps ensure that workers can afford a decent standard of living. When workers have more money in their pockets, they are more likely to spend it on goods and services, which will help to stimulate economic growth.
It is also worth noting that when the minimum wage is raised, it can increase overall labour productivity as businesses attempt to become more efficient for them to remain profitable.
There are several financial policies that legislators should consider as the global economy recovers from the COVID-19 impact to stimulate economic growth. Implementing any of these policies will help improve the overall economic conditions in their respective countries.
