Greece Monetary & Fiscal Policy

Only available on StudyMode
  • Download(s) : 652
  • Published : October 28, 2012
Open Document
Text Preview
1)Describe the general policy objectives for monetary policy As a member of the Eurosystem, the Bank of Greece does not retain control of its policy objectives. Monetary policy is set by the European Central Bank In following the policy objectives of the European Central Bank, Greece’s monetary policy maintains the primary objective of achieving price stability. This general objective has been quantified as achieving an inflation rate below, but close to, to 2% on the medium term.

2)Operating Target of Monetary Policy & Tools
In following the policy objectives of the European Central Bank, Greece’s monetary policy maintains the primary objective of achieving price stability. This general objective has been quantified as maintaining an inflation rate below, but close, to 2% on the medium term.

3)Primary Objectives of Current Fiscal Policy (2011).
Greece’s fiscal policy objective in the past five years has been to decrease the federal budget deficit and ultimately pay off the government debt. These reforms are partially induced by the EU offering bailout loans contingent on Greece’s progress toward budgetary reform. The Greek government has committed to a comprehensive action plan which aims to reduce the budget deficit to 2.6% of GDP. This reform is to be achieved by streamlining the efficiency of existing government functions, quickening the privatization of government property, and modernization of the tax system to reduce tax evasion.

In addition to reducing governmental inefficiency, Greece’s government aims to address the budget deficit by inducing faster economic growth rates. Greece’s GDP was hit hard during the global recession, so the government has identified returning to positive growth as a vital objective. Inherently, since budget deficits must be financed and, hence, pulls money out of the private sector, eliminating the fiscal budget deficit will supplement this goal. Further, the bank proposes a comprehensive action plan for...
tracking img