Economic analysis of an commissioned paper Term

Economic analysis of an commissioned - Term Paper Example However, to overcome these economic challenges, the relevant authorities (including the private and public) should effectively address design, agency problem, and daunting information. Since these challenges have adverse effect on the economic growth and performance of Ontario and Canada, it is important that economic policies (fiscal and monetary) be adjusted to match the current industrial challenges. In particular, fiscal policies, which have a wide spread immediate impact on the economy, should be recommended. Fiscal policies which are effective in addressing market imperfection are government expenditure, sectoral tax provisions, and subsidies. The Ontario government proposed price ceiling and subsidies on specific goods and services, supporting venture capital investments and increased government expenditure as appropriate fiscal policies for addressing industrial market imperfections and challenges. Sustainable fiscal policies advanced by Ontario government through sectoral ne utrality and effective tax policy would be attractive to investors, thus more investments both in infrastructure and services. INTRODUCTION While analyzing effects of fiscal policies on the economic growth and development, it is important to consider both long-run and short-run implications of the proposed fiscal or monetary policy tools. Similarly, the policy maker should take into account the existing relationship between macro-economic variables and fiscal policy frameworks. In this aspect, policy makers should make a clear distinction between classical long-run and Keynesian short-run effects on the economic variable under investigation (Carl, 2008). In analyzing the effects of any fiscal policy on economic growth and development, all the potential simultaneous changes associated with such decision should be accounted for in the policy framework. As demonstrated by a number of researches, in the short-run, fiscal policies are not very effective in bringing significant changes on economic variables of growth and development, thus, Keynesian economic principles are ineffective in the short-run. However, in the long-run, generally, the economy will not benefit from expansionary fiscal policies. It is therefore essential for the government of Ontario to recognize that alterations in government expenditure without an equivalent revenue change will results into imbalanced budget, which will further impact on the economic growth indicators. Electoral process of any country is based on how effective the incoming government is going to deliver on their promises. Voters on the other hand, seek to elect leaders whose policies and manifestos have the potential of improving the living standards and reduce the cost of living to the citizens. Most governments rely on fiscal and monetary policies to deliver their promises to the voters (Walker, 2002). However, fiscal policies directly affect the voters and the economy as a whole. Through economic interventions such as spe cial tax measure and specific subsidies, the government often seeks to deliver on its goals and promises on better economic performance. Ontario is not an exception. The government of Ontario uses fiscal interventions as leading economic and growth policies. A better fiscal policy framework focuses on fostering economic development through work promotion, encouraging investments and savings, and promoting productivity through technological inventions and innovations both in the long-run and short-run. Besides,