Economic Theories on Economic Policies - Dictionary of Arguments
Mause I 227f
Economic Policies/Economic theories: Economic policy decision-makers can set their goals on the basis of existing time lags and often do not directly control incomplete knowledge of the exact transmission channels of economic policy measures (transmission processes). For this reason, economic policy strategies are formulated that cover the entire transfer process of economic policy impulses, from the use of instruments through operational targets and intermediate targets to the final objectives.
The time division of the transmission channels provides economic policy with faster and more reliable information on potential undesirable developments.
For example, central banks and the European Central Bank differ in terms of the order of the subgoals and the internal dependencies of intermediate steps (analysis of monetary trends/analysis of economic developments).
Mause I 236f
Economic Policies/Economic theories: Economic theories are not politically neutral but can usually be assigned either to the employer group (supply-oriented theories) or to the employee group (demand-oriented theories).
Supply PolicyVsDemand Policy: supply-side oriented economic politicians accuse the representatives of a demand policy of pursuing short-term employment success through economic policy "flash fires" at the expense of long-term growth development and tend to neglect long-term supply reforms.
Demand PolicyVsSupply Policy: Demand-oriented economic politicians accuse supply policy of unilaterally pursuing the interests of higher earners at the expense of the mass of employees with their demands for the least possible regulation of labour markets and low tax rates.
Keynesianism: usually provides the arguments for orientation on the demand side
Neoclassicism: provides arguments for the supply-side direction.
Demand Policy: aims primarily at full utilisation of production potential.
Supply Policy: is growth-oriented, i.e. the primary goal is to improve production potential rather than eliminate fluctuations in output around production potential (output gap).
New Neoclassical Synthesis: attributes relevance to both groups. (1)
(VsNew Neoclassical Synthesis: see (2))
The recommendation of rule-based economic policy is derived from the "New Neoclassical Synthesis". See Economic Policies/Neoclassical Synthesis.
For an overview of the disputes between the different schools: see Wren-Lewis. (3)
1. Marvin Goodfriend, & Robert G. King.,The new neoclassical synthesis and the role of monetary policy. In NBER Macroeconomics annual, Hrsg. Ben S. Bernanke und Julio J. Rotemberg, S. 231– 282. Cambridge 1997.
2. Philip Arestis, Philip, Hrsg., Is there a new consensus in macroeconomics? London 2007.
2. Simon Wren-Lewis The return of schools of thought in macroeconomics, Vox EU. 2012. http:// voxeu. org/ article/ return-schools-thought-macroeconomics._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
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