Is South African fiscal and monetary policy complementary Essay

Is South African fiscal and monetary policy complementary - Essay Example The fiscal components that fiscal policies aim to control include physical properties and capital flow. On the other hand, monetary policy is action or decision by a monetary authority to influence the interest rate and exchange rate in an effort to foster economic growth (Mbwoweni 2003). This paper undertakes an analysis of whether the fiscal policies in South Africa have complementary effects. In the analysis, the paper uses the actual monetary and fiscal policy that has been in this country from 2002 to date. Fiscal policy South African fiscal policy Government of South Africa has undertaken several fiscal policy adjustments since the end of apartheid. This is because of changes in economic situations in the country and the need of the country to foster economic development. ... South Africa has been affected greatly by globalization. Since the end of Apartheid, its trade with other countries has been increasing almost annually. The political and economic environments of the trading partners of South Africa differ significantly from those of South Africa. This difference has been affecting this country’s economy greatly in the past ten years. As a result, the fiscal policy of this country has been influenced by both domestic and international factors in the period after 2002. The domestic factors that affect the fiscal policy of this country include the economic problems that this country experiences. International factors that affect this country are both the economic situation in other countries and the economic problem experienced in the world market. In the adjustment of fiscal policy, the government of this country has to consider these two categories of factors. South Africa’s fiscal policy has several dimensions. The dimensions are ident ified as very essential components of the policy. This is because they are the ones that dictate the kind action taken by the policy in its effort to achieve economic growth and sustainability. Major dimensions of the fiscal policy of this country include taxation levels, individual and government spending, fiscal relations, and debt and interest costs (Jooste, Liu, & Naraidoo 2012). These dimensions control the fiscal components of an economy either directly or indirectly. As a result, they influence the economic activities that relate to the fiscal components of this country’s economy. This plays a very significant role on controlling the economy and enhancing sustainability of economic growth. Roles