What Are the Challenges Associated with Fiscal Policies?
There are several challenges associated with the implementation of fiscal policies:
1. Timing: Implementing fiscal policies at the right time is crucial. Delays can either exacerbate economic problems or render the policies ineffective.
2. Political Constraints: Fiscal policies often require legislative approval, which can be influenced by political considerations rather than economic rationale.
3. Debt Levels: High levels of government debt can limit the effectiveness of fiscal policies. Excessive borrowing to finance government spending can lead to higher interest rates and inflation.