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Policy Normalization and G20 Presidency

Fiscal and monetary policies in the United States, for example, are used to support the demand side that declines due to reduced mobility by providing cash transfer assistance to households.

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By ARI KUNCORO
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Coordinating Minister for Economic Affairs Airlangga Hartarto gave a speech at the opening of the G20 Indonesia Presidency at Banteng Field Park, Jakarta, Wednesday (1/12/2021).

In 1977, Kydland and Prescott, winners of the 2004 Nobel Prize in Economics, introduced the concept of Time Inconsistency. A policy that was considered optimal in the past may no longer be optimal today, and what is considered optimal today may no longer be deemed so in the future.

Fiscal and monetary policies in the United States, for example, are used to support the demand side that declines due to reduced mobility by providing cash transfer assistance to households. The Federal Reserve, the US central bank, injected liquidity into the economy through the purchase of financial assets. It has resulted in the reduction of the cost of credit for the housing sector, one of the main drivers of economic growth.

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naranasrullah
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