We often see a country going through a tough time, with rising inflation and unemployment negatively affecting its GDP. This scenario usually occurs when the country’s economy is not financially sustainable and suffers in the long term, even when some policies positively affect it in the short term. For example, a country may lower the tax rates by a hefty margin without increasing other revenues. Although this may benefit the citizens for some time, the increased money in hand may result in inflation and negatively impact the economy’s financial stability in the long term. 

Hence, various government policies directly or indirectly affect financial sustainability by dictating how long a newly introduced policy will benefit an economy’s stability. Understanding how policies impact an economy’s financial sustainability is essential for a better understanding of policy making and financial stability. 

What is financial sustainability 

Financial sustainability refers to the ability of a government, … Read More ...