Measuring the Effects of Monetary and Fiscal Policy Changes on the U.S. Economy (1982-2012)

This paper investigates the relationship between economic policy goals and the monetary and fiscal policy tools used to achieve them. A background is provided regarding current economic policy including an explanation of how a monetary and fiscal policy is formed and modified. A multiple regression analysis is conducted to measure the relationship between economic policy goals and the tools used to achieve them; the evidence suggests that there is a strong relationship between the two. It is further determined that it¡¯s necessary for the government and Federal Reserve to pay close attention to the policy tool variables studied, when making informed decisions regarding economic policy.