The Goals of Macroeconomic Policy

by Martin Prachowny

Overview

Politicians win elections by promising 'Jobs! Jobs! Jobs!' but in practice these promises quickly fall by the wayside. The Goals of Macroeconomic Policy asks why. It begins with the observation that there is no convincing economic argument that full employment should be the primary objective of economic policy in all circumstances. In the light of this it examines whcy policy has failed so consistantly. It explains this by a theory of the labour market which shows why most workers are happy to operate in a way which militates against full employment. It then proceeds to analyse the rather dire consequences of this for the budget deficit.

Product Details

ISBN-13:	9780415107648
Publisher:	Taylor & Francis
Publication date:	06/16/1994
Pages:	228
Product dimensions:	5.44(w) x 8.50(h) x (d)

About the Author

Martin Prachowny is Professor of Economics at Queen’s University, where he has taught since 1967, while holding visiting positions at MIT and LSE. He is the author of five previous books, the most recent of which is Money in the Macroeconomy (CUP, 1985), and many journal articles in the area of macroeconomic policy.

Table of Contents

Preface Introduction 1 The Theory of Macroeconomic Goals 1.1 The Pareto Optimality of Macroeconomic Goals 1.2 The Benefits of Full Employment 1.3 The Welfare Costs of Inflation 1.4 The Trade-off between Unemployment and Inflation 1.5 Summary 2 The Achievement of Macroeconomic Targets: U.S. Experience, 1948–90 2.1 U.S. Macroeconomic Performance, 1948–90 2.2 The Effectiveness of Stabilization Policy 2.3 Legislative Intent for Stabilization Policy 2.4 Implementation of Stabilization Policy 2.5 Concluding Remarks 3 The Market for Labor Services and the Macroeconomy 3.1 The Supply of Labor 3.2 The Demand for Labor 3.3 Equilibrium in the Labor Market 3.4 Disequilibrium and Unemployment 3.5 Stabilization Policy and the Labor Market 3.6 Types of Unemployment 3.7 The Empirical Relevance of the Model 3.8 Conclusions about Labor-Market Characteristics 4 The Welfare Economics of Macropolicy 4.1 Welfare Analysis in the Labor Market 4.2 The Possibility of Pareto Improvements 4.3 The Welfare Effects of Stabilization Policy 4.4 The Equity Argument 4.5 Democratically Determined Wages 4.6 Democratically Determined Macropolicy 4.7 Conclusions 68 5 Public Expenditures and the Private Interest 5.1 Government Demand and Industry Welfare 5.2 The Welfare of Producing Agents 5.3 A Measure of Industry Welfare Changes 5.4 A Case Study of Federal Government Purchases 5.5 An Alternative Explanation 5.6 Conclusion 80 6 The Macroeconomic Policy Apparatus 6.1 Individual Support for Public Choices 6.2 Government Activity as Zero-sum Games 6.3 Bias in Stabilization Policies 6.4 Improving the Policy Apparatus 6.5 Exploitation of Stabilization Policies 6.6 Conclusion