英語論文Policy Debates

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IntheprevioussectionwelearnedthattheFedandthegovernmentusemonetarypolicyandfiscalpolicytosteertheeconomy.Buttheefficacyofmonetarypolicyandfiscalpolicyisheavilydebated.Bothsupportersanddissentersraisemanyquestionsastotheexactworkingdetailsofmonetarypolicyandfiscalpolicy.

Onemajorareaofdebateiswhethermonetarypolicyandfiscalpolicyshouldberunbyactivecontrolorwhethertheyshouldbedealtwithmorepassively.OnesidebelievesthattheFedandthegovernmentcannotreacttoeconomicchangeswithenoughspeedtojustifyactivepolicyandthatinsteadpassivepolicyismoreproductiveandsafer.Theothersidebelievesthatfastactionthroughactivepolicyisthesurestandsafestwaytokeeptheeconomyontrack.

Anothermajorareaofdebateintherealmofmacroeconomicsdealswiththebudgetdeficit.Therearenumerousquestionsthatsurroundthebudgetdeficitdebate.Forinstance,shouldthebudgetbebalanced?Whatistheburdenofthenationaldebt?Whatarethelong-termeffectsofanunbalancedbudget?Theanswerstothesequestionsdivideeconomists.

ThisSparkNotecoverstwomajoreconomicpolicydebatesthatrelatedirectlytomoneyandtotheeconomy.Thesedebatesareimportantsincetheyoftendivideeconomists.Similarly,byunderstandingthesedebates,itispossibletoviewthecomplexityofmacroeconomicpolicyintherealworld.Whilemacroeconomictheoryseemsratherblackandwhite,theapplicationofthistheorytotherealworldisnowherenearthissimple.

TheFedandthegovernmentusedifferenttoolstosteertheeconomy.Recallthatmonetarypolicy,thetoolboxoftheFed,includesperformingopenmarketoperations,andchangingboththereserverequirementandthefederalfundsinterestrate.Recallalsothatfiscalpolicy,thetoolboxofthegovernment,includeschangingbothtaxesandgovernmentspending.

Allofthesetoolscanbecontrolledactively.Thatis,iftheFedorthegovernmentdecidetouseexpansionarypolicy,theycansimplyselectatoolfromthepolicytoolboxanduseit.Inthisway,activepolicyisdefinedasactionsbytheFedorbythegovernmentthataredoneinresponsetoeconomicconditions.Thatis,theFedorthegovernmentchoosetorespondtosomethingintheeconomybyundertakingaspecificpolicy.Thisisalsocalleddiscretionarypolicy.

Activepolicy,whilesimple,isopentoanumberofdifficulties.BecauseitreliesontheactionsandexperiencesofthepolicymakersintheFedandinthegovernment,theweaknessesorprejudicesofthesepolicymakerscanbetranslatedintoofficialeconomicpolicy.Forinstance,duringelectionyears,acentralbankermaypursuepolicythatenablestheeconomytogrowintheshortrun,regardlessofthelong-termeffects,inordertohelpacandidate.Ontheotherhand,thecentralbankermaycontracttheeconomytohurtacandidate.Similarly,itwouldbepossibleforthepolicymakerstopursuepoliciesthatachievetheirselfishendsratherthanthosethatarebestfortheeconomyatlarge.Finally,withactivepolicy,policymakerscansayonethinganddoanother.Theremaybebenefitstomakingthepublicbelievethatsomethingdifferentisoccurringintheeconomyratherthanwhatactuallyisoccurring.Forinstance,iftheFedwantstoincreaseinvestment,itcouldusedeceptionbyclaimingthatitraisedinterestrateswhilenotactuallydoingso.Inthisscenario,privateinvestorswouldsavemorebutinvestmentwouldremainattheoldlevelorevenincrease.Thus,itisreasonabletoclaimthatactivepolicyleavesmonetarypolicyandfiscalpolicyopentonotonlyaccidentalhumanerrorbutalsotomaliciousandself-servingacts.

Buttherearesomeadvantagestoactivepolicy.Activepolicyallowspolicymakerstorespondtoshiftsinacomplexeconomyandsteertheeconomyintheoptimaldirection.Forinstance,anexcellentpolicymakermaybeabletokeeptheeconomygrowingsteadilywithoutinflationifsheisgivencompletecontrolofmacroeconomicpolicy.Similarly,activepolicy,atleastintheory,givescontroltothoseindividualswhoareconsideredoptimallycapabletodealwiththefluctuationsintheeconomy.Thatis,activepolicyallowsthesharpestpolicymakersofthetimetocontroltheeconomy.Finally,theabilitytocreatedifferentexpectationsbetweenthepolicymakersandthepubliccanbeanadvantageouspolicytool,asdescribedinthepreviousparagraph.

Passivepolicy

Incontrasttoactive(ordiscretionary)policyispassivepolicy(orpolicybyrule).Underthissystem,macroeconomicpolicyisconductedaccordingtoapresetseriesofrules.Theserulestakeintoaccountmanymacroeconomicvariablesanddictatethebestcourseofactiongiventheseconditions.Forinstance,apassivepolicymayfollowtherulethatinordertostabilizetheeconomytheinterestratemustbedroppedonepointwheneverthenominalGDPfallsonepercent.