An analysis of the countrys macro economic objectives worldwide

The structural features of the economy may also affect the impact a particular shock has on the economy, as well as the insulating properties of exchange rate regimes. It is therefore crucial to have social safety nets in place to ensure that poor households are able to maintain minimum consumption levels and access to basic social services during periods of crisis.

For example, if the predominant source of disturbance to an economy is shocks to the terms of trade, a flexible exchange rate regime may be best because the nominal exchange rate is free to adjust in response to the shock and bring the real exchange rate to its new equilibrium see, for example, Devarajan and Rodrik, To the extent that governments impose controls on these asset markets, it impedes the ability of the poor to use these savings instruments, and channels their savings into less effective instruments.

Therefore, countries that wish to target a significantly lower rate of inflation need to ensure that the corresponding fiscal adjustment is adequate. The industrial policies pursued by many African developing countries in the s have long been discredited World Bank, What is essential is that the variable targeted be nominal, and not real, since real variables cannot provide an anchor for nominal prices.

In a developing countrytaking account of allocational effects means that the tax system in particular should not attempt to affect savings and investment—experience indicates that aggregate savings and investment tend to be insensitive to taxes, with the result that the tax system typically only affects the allocation of those aggregates across alternative forms.

On the other hand, neo-classical economics, in which writings of Pigou and Marshall predominate, is mainly micro-analysis.

Macroeconomics/Macroeconomic Objectives

In doing so, policymakers should consider the scope for reallocating existing government spending into priority areas and away from nonproductive, nonpriority spending, as well as from areas where a rationale for public intervention does not exist.

As these topics pertain more broadly to political economy, rather than exclusively to macroeconomics, they are beyond the scope of this pamphlet.

BRIC Economies

While faster growth in agriculture may address rural poverty in the short-term, reliance on agricultural activity may also intensify output variability, which, in turn, would contribute to increasing rather than decreasing poverty.

Kalecki advanced the view that the relative shares of wages and profits in the national income are governed by the degree of monopoly in the economy.

Taxes on international trade should play a minimal role. In the absence of medium-term commitments of aid, policymakers may therefore wish to be cautious in assuming what levels of assistance would be forthcoming in the future.

Rather, arriving at an appropriate, integrated poverty reduction and macroeconomic framework will require juggling a large number of parameters and weighing the trade-offs between multiple objectives.

His macroeconomic model revealed how consumption function, investment function, liquidity preference function, conceived in aggregative terms, interact to determine income, employment, interest and the general price level. Adjusting a policy stance is often done via the adoption of a new instrument or the modification of an existing one.

Inflation targeting sets an inflation target for the central bank and gives the responsibility for achieving the target to the central bank. However, this is usually regarded as being full employment and is referred to as the natural rate of unemployment. Because economic growth is the single most important factor influencing poverty, and macroeconomic stability is essential for high and sustainable rates of growth.

There may also be uncertainty regarding aid flows, especially over the medium term, as well as considerations regarding long-term dependency on external official aid.

Broadly speaking, this can be achieved by setting one objective for monetary and exchange rate policies: Transmission Channels Credit markets, as well as safe asset markets for appropriate saving, are major instruments for coping with income volatility.

Can discretionary nonpriority spending be cut back more? In view of the fact that investment adds to the productive capacity i. Using a nominal anchor involves specifying and committing to a predetermined path for a nominal variable—such as the exchange rate i. The problem of inflation is a serious problem faced these days, both by the developed and developing countries of the world.

First, in light of the importance of growth for poverty reduction, and of macroeconomic stability for growth, the broad objective of macroeconomic policy should be the establishment, or strengthening, of macroeconomic stability.

More generally, evidence shows that inflation performance has been better in countries using a nominal anchor Phillips, Financial sector vulnerability and transmission to other sectors. Of course, one of the challenges facing the policymaker is to identify which shocks are in fact predominant in a particular economy.

Government behavior in response to shocks is also a major determinant of the effects of these shocks on the poor. Real property taxes may also be used if they can be administered appropriately, though this may be difficult in developing countries.

The effect of gold on hedge funds

External shocks can be particularly detrimental to the poor because they can lower real wages, increase unemployment, reduce nonlabor income, and limit private and net government transfers. Numerous statistical studies have found a strong association between national per capita income and national poverty indicators, using both income and nonincome measures of poverty.

Macroeconomic objectives and policy

Moreover, the study found that the effect of growth on the income of the poor was on average no different in poor countries than in rich countries, that the poverty—growth relationship had not changed in recent years, and that policy-induced growth was as good for the poor as it was for the overall population.Broadly, the objective of macroeconomic policies is to maximize the level of national income, providing economic growth to raise the utility and of living of participants in the economy.

There are also a number of secondary objectives which are held to lead to the maximization of income over the. Macroeconomic Policy and Poverty Reduction Brian Ames Can the macroeconomic targets be modified in a manner that would not undermine the interrelated objectives of rapid economic growth, low and stable inflation, and poverty reduction?

to smooth consumption over time, as well as to guard against adverse shocks.

Macroeconomics: Approach, Content, Macroeconomic analysis and Other details

For a recent. Economic growth was strong from to due to macroeconomic stability and a global commodities boom. Because of world financial crisis in the second half of economy began to slow down.

GDP was growing % in and % in Finally, the Journal Citation Reports has published the impact factors for ISI indexed journals. As in a similar post one year ago, I discuss the impact factors for macroeconomic journals.

I presented the impact factors for both and (that is, published in andrespectively). It is worth mentioning that classical economic theory of Adam Smith, Ricardo, Malthus and J. S. Mill was mainly macro-analysis, for they discussed the determination of growth of national income and wealth, the division of national income among broad social classes (total wages, total rent and total profits), the general price level and the.

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An analysis of the countrys macro economic objectives worldwide
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