Government borrowing is too high and interest rates are too low in many countries; fiscal stimulus does not work and cheap money leads only to inflation. Explain and discuss the various caveats of this macroeconomic problem and what policy measures will you suggest and Why if you are hired as a Junior Policy Advisor in an Advisory Board of Economists in one such country including Canada? Use economic theory, policy, and data to illustrate and validate your answer.
Government borrowing is the money or debt under the jurisdiction of the country. Government borrowing represents the money belonging to the public owed by the central bank of the country's economy. The main source of government funds is tax from the citizens of the country. This makes government debt or borrowing to be an indirect debt of the citizens. In some economic terms, government borrowing refers to public or national debt....
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