Solution for Flation in Vietnam Essay

Solutions for controlling inflation and stabilizing the macroeconomic in Vietnam In short term, firstly, the government should manage the monetary policy as well as the tight fiscal policy in order to reduce aggregate demand of the economy, stabilizing the value of Vietnam dong. In terms of the monetary policy, it is necessary to coordinate reasonably the amount of credit money, avoiding the situation that the amount of credit money increases suddenly at the end of a year. In terms of the fiscal policy, according to experiences in many countries, the measure to curb inflation in the short term is mostly the tight monetary policy.

However, it is quite difficult to carry out the monetary policy, therefore, the restriction of inflation in the future will depend heavily on the fiscal policy. To be more specific, the key factor is the serious implementation of cutting down public investment, reducing regular expenditure and budget deficit. Secondly, the government should implement some psychological stability measures as well as improve public belief in macroeconomic policy, curb inflation expectation. It also need to be enhanced the communication, dissemination and transparency of polices, given clear effective polices.

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Last but not least, the government should keep going on the process of removing the importance of gold, dollarization, reducing the high pressure on Vietnam dong. In long term, the fundamental solution to restrict inflation is to control aggregate demand which is need to be ensured compatibility with the balance of the economy and implementing comprehensive solutions to the disclosure of resources in order to improve yield potential of the economy, to create conditions for the higher economic growth in the next years.

To be more precise, they are divided into three groups of solution: Solutions for controlling aggregate demand, Solutions for restructuring the economy and solutions for the advancement of communication. In the first place: Solutions for controlling aggregate demand, it includes following solutions: at first, it is necessary to reform the construction of planned targets. Secondly, The conduct of monetary policy has to give the signal to make people aware of the government would be willing to maintain a stable rate of inflation, thereby reducing inflationary expectations of the public as well as the actual inflation.

Otherwise, State Bank should commit to maintain the inflation rate at a certain level. The third solution in this group is improving the efficiency of public investment, increasing decentralization and more control of public investment, including capital budget, government bonds and state credit. In the second place: Solution for restructuring the economy, it includes: firstly, making the transition from mainly width developed models to width and depth reasonable developed models and expansion as well as focus on improving the quality, efficiency and sustainability.

Secondly, making restructuring widely and deeply the entire state sector, including shares associated with renewing and improving the quality of corporate management in the state. Finally yet importantly, the government should ensure the balance between the supply and demand for good. In the third place: advancement of communication, it is associated with enhancing the sense of responsibility, thoroughly overcoming the inflation caused by psychological factors not only for the business community but also for the public.