Q&A

- Which country of the two you selected has implemented the most preferable economic policies?

- I think Finland has more preferable economic policies because even though it’s communism and they pay a lot of tax, their living and health conditions are very well done compared to Japan. Also, they are one of countries that has high economic status and it’s continuing to grow.

- Should governments try to manipulate the economy? (Give evidence and explanation to support your thoughts).

- I think the government should manipulate the economy because free market economy tend to skew to other directions due to the individual entrepreneur’s fear and greed. I think the government regulates the economy but also use tools to mitigate the natural ups and downs of economic cycles. For example, US Federal Reserve helps to maintain a stable growth of the economy through price stability and full employment. The Fed only used to manipulate short term interest rates, but they have now also developed new tools to fight economic crisis. (Manipulating interest rate, Open market operation, Reserve requirement etc)

January 18th, 2015

Monetary and Fiscal policy

Japan

Currently in Japan, Monetary policy pertains to the regulation, availability and cost of credit while the fiscal policy works on government expenditures and dept. Japan has a central bank and it shows the cost of credits and availability. But recently, Japan’s government changed their Monetary and Fiscal policy. The new policy was made in order to control government spending, and make Japanese business more competitive. The citizens and specialists in Japan call these change Abeconomics. People believe that there are benefits from this change, but also many disadvantages. People believe that it will lead to more growth and will bring higher investment and better net trade contributions. But tighter fiscal policy will bring higher consumption tax rate and will be difficult for Japan to transition to self sustained growth.

Finland

According to Finland’s Monetary policy, their primary objective of the Eurosystem is to maintain price stability in the euro area and safeguard the purchasing power of euros. This monetary policy should provide framework for policy decision process. It should ensure that the government can make analysis about price stability and decisions. Also, it should be a tool that is used to communicate with citizens. It’s shown to be efficient when the public is convinced tat the policy is just for the price stability. The price stability should increase the consumer prices for euros below 2%. They are also aiming to inflation rates close to 2%. I think the citizens also like this policy because it has brought a bit of increase in the last 10 years.

January 18th, 2015

JUST GOVERNMENT

Japan and Finland’s government

Japan’s government form is Constitutional Monarchy. This government form is where a king or queen acts as Head of State. But the parliament makes decisions in laws. Thus, the duties of the monarchs and politics are significantly different. The reason why countries such as Japan keep constitutional monarchy till today is because it provides stability, continuity and national focus. The icon of monarchs give citizens stability and encourage nationalism. But Socialism, which is Finland’s government, is quite different from constitutional monarchy. Socialism is where it’s centered on changing the economic means of ownership and production. It’s main goal is to create an economy where there are equal ownership to the goods that are produced. It’s different from Japan where their economic system is capitalism and capitalism is where individuals have ownership to their own profit. Also, the government itself has different goals. Japan is more focused on their nationalism where Finland has more economic meaning.

January 18th, 2015