read httpswwwbloombergcomnewsarticles20170706fedsfischersays

read https://www.bloomberg.com/news/articles/2017-07-06/fed-s-fischer-says-fiscal-policy-uncertainty-denting-investment

https://www.washingtonpost.com/news/wonk/wp/2017/07/24/the-imf-cuts-its-u-s-growth-forecast-citing-trumps-unfulfilled-promises/?utm_term=.6e9297e118d9

Explain how the fiscal policies of the US in the next few years could impact the nation\'s economic growth. Are some types of government spending and tax cuts more effective than others in building long-term sustainable growth?

Solution

Current growth projection by IMF says that US economy is going to grow at the rate of 2.1 % over the next two years. IMF has reduced growth prediction of US economy on the back of inability of Trump to deliver on his promises. It is expected that government is going to make huge expenditure in areas which are neglected by the private sector. Thus, fiscal policy shall be aimed at making expenditure on infrastructure, education and health. Infrastructure development is key to the gain long term sustainable growth. Tax cuts on business units would be main driver of growth in long term.