宏观经济学曼昆版PPT82962280.pptx

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1、13 FINAL THOUGHTSCopyright 2004 South-WesternFive Debates Over Macroeconomic Policy Copyright 2004 South-WesternFive Debates over Macroeconomic Policy1.Should monetary and fiscal policymakers try to stabilize the economy?2.Should monetary policy be made by rule rather than by discretion?3.Should the

2、 central bank aim for zero inflation?4.Should the government balance its budget?5.Should the tax laws be reformed to encourage saving?Copyright 2004 South-Western1. Should monetary and fiscal policymakers try to stabilize the economy?Copyright 2004 South-WesternPro: Policymakers should try to stabil

3、ize the economy The economy is inherently unstable, and left on its own will fluctuate. Policy can manage aggregate demand in order to offset this inherent instability and reduce the severity of economic fluctuations.Copyright 2004 South-WesternPro: Policymakers should try to stabilize the economy T

4、here is no reason for society to suffer through the booms and busts of the business cycle. Monetary and fiscal policy can stabilize aggregate demand and, thereby, production and employment.Copyright 2004 South-WesternCon: Policymakers should not try to stabilize the economy Monetary policy affects t

5、he economy with long and unpredictable lags between the need to act and the time that it takes for these policies to work. Many studies indicate that changes in monetary policy have little effect on aggregate demand until about six months after the change is made.Copyright 2004 South-WesternCon: Pol

6、icymakers should not try to stabilize the economy Fiscal policy works with a lag because of the long political process that governs changes in spending and taxes. It can take years to propose, pass, and implement a major change in fiscal policy.Copyright 2004 South-WesternCon: Policymakers should no

7、t try to stabilize the economy All too often policymakers can inadvertently exacerbate rather than mitigate the magnitude of economic fluctuations. It might be desirable if policy makers could eliminate all economic fluctuations, but this is not a realistic goal.Copyright 2004 South-Western2. Should

8、 monetary policy be made by rule rather than by discretion?Copyright 2004 South-WesternPro: Monetary policy should be made by rule Discretionary monetary policy can suffer from incompetence and abuse of power. To the extent that central bankers ally themselves with politicians, discretionary policy

9、can lead to economic fluctuations that reflect the electoral calendarthe political business cycle.Copyright 2004 South-WesternPro: Monetary policy should be made by rule There may be a discrepancy between what policymakers say they will do and what they actually docalled time inconsistency of policy

10、. Because policymakers are so often time inconsistent, people are skeptical when central bankers announce their intentions to reduce the rate of inflation.Copyright 2004 South-WesternPro: Monetary policy should be made by rule Committing the Fed to a moderate and steady growth of the money supply wo

11、uld limit incompetence, abuse of power, and time inconsistency.Copyright 2004 South-WesternCon: Monetary policy should not be made by rule An important advantage of discretionary monetary policy is its flexibility. Inflexible policies will limit the ability of policymakers to respond to changing eco

12、nomic circumstances.Copyright 2004 South-WesternCon: Monetary policy should not be made by rule The alleged problems with discretion and abuse of power are largely hypothetical. Also, the importance of the political business cycle is far from clear.Copyright 2004 South-Western3. Should the central b

13、ank aim for zero inflation?Copyright 2004 South-WesternPro: The central bank should aim for zero inflation Inflation confers no benefit to society, but it imposes several real costs. Shoeleather costs Menu costs Increased variability of relative prices Unintended changes in tax liabilities Confusion

14、 and inconvenience Arbitrary redistribution of wealthCopyright 2004 South-WesternPro: The central bank should aim for zero inflation Reducing inflation is a policy with temporary costs and permanent benefits. Once the disinflationary recession is over, the benefits of zero inflation would persist.Co

15、pyright 2004 South-WesternCon: The central bank should not aim for zero inflation Zero inflation is probably unattainable, and to get there involves output, unemployment, and social costs that are too high. Policymakers can reduce many of the costs of inflation without actually reducing inflation.Co

16、pyright 2004 South-Western4.Should fiscal policymakers reduce the government debt?Copyright 2004 South-WesternPro: The government should balance its budget Budget deficits impose an unjustifiable burden on future generations by raising their taxes and lowering their incomes. When the debts and accum

17、ulated interest come due, future taxpayers will face a difficult choice: They can pay higher taxes, enjoy less government spending, or both.Copyright 2004 South-WesternPro: The government should balance its budget By shifting the cost of current government benefits to future generations, there is a

18、bias against future taxpayers. Deficits reduce national saving, leading to a smaller stock of capital, which reduces productivity and growth.Copyright 2004 South-WesternCon: The government should not balance its budget The problem with the deficit is often exaggerated. The transfer of debt to the fu

19、ture may be justified because some government purchases produce benefits well into the future.Copyright 2004 South-WesternCon: The government should not balance its budget The government debt can continue to rise because population growth and technological progress increase the nations ability to pa

20、y the interest on the debt.Copyright 2004 South-Western5.Should the tax laws be reformed to encourage saving?Copyright 2004 South-WesternPro: Tax laws should be reformed to encourage saving A nations saving rate is a key determinant of its long-run economic prosperity. A nations productive capabilit

21、y is determined largely by how much it saves and invests for the future. When the saving rate is higher, more resources are available for investment in new plant and equipment.Copyright 2004 South-WesternPro: Tax laws should be reformed to encourage saving The U.S. tax system discourages saving in m

22、any ways, such as by heavily taxing the income from capital and by reducing benefits for those who have accumulated wealth.Copyright 2004 South-WesternPro: Tax laws should be reformed to encourage saving The consequences of high capital income tax policies are reduced saving, reduced capital accumul

23、ation, lower labor productivity, and reduced economic growth.Copyright 2004 South-WesternPro: Tax laws should be reformed to encourage saving An alternative to current tax policies advocated by many economists is a . With a consumption tax, a household pays taxes based on what it spends not on what

24、it earns. Income that is saved is exempt from taxation until the saving is later withdrawn and spent on consumption goods.Copyright 2004 South-WesternCon: Tax laws should not be reformed to encourage saving Many of the changes in tax laws to stimulate saving would primarily benefit the wealthy. High

25、-income households save a higher fraction of their income than low-income households. Any tax change that favors people who save will also tend to favor people with high incomes.Copyright 2004 South-WesternCon: Tax laws should not be reformed to encourage saving Reducing the tax burden on the wealth

26、y would lead to a less egalitarian society. This would also force the government to raise the tax burden on the poor.Copyright 2004 South-WesternCon: Tax laws should not be reformed to encourage saving Raising public saving by eliminating the governments budget deficit would provide a more direct an

27、d equitable way to increase national saving.Copyright 2004 South-WesternSummary Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe policy can be used to offset this inherent instability. Critics of active policy emphasize that policy affects the econom

28、y with a lag and our ability to forecast future economic conditions is poor, both of which can lead to policy being destabilizing.Copyright 2004 South-WesternSummary Advocates of rules for monetary policy argue that discretionary policy can suffer from incompetence, abuse of power, and time inconsis

29、tency. Critics of rules for monetary policy argue that discretionary policy is more flexible in responding to economic circumstances.Copyright 2004 South-WesternSummary Advocates of a zero-inflation target emphasize that inflation has many costs and few if any benefits. Critics of a zero-inflation t

30、arget claim that moderate inflation imposes only small costs on society, whereas the recession necessary to reduce inflation is quite costly.Copyright 2004 South-WesternSummary Advocates of reducing the government debt argue that the debt imposes a burden on future generations by raising their taxes

31、 and lowering their incomes. Critics of reducing the government debt argue that the debt is only one small piece of fiscal policy.Copyright 2004 South-WesternSummary Advocates of tax incentives for saving point out that our society discourages saving in many ways such as taxing income from capital and reducing benefits for those who have accumulated wealth. Critics of tax incentives argue that many proposed changes to stimulate saving would primarily benefit the wealthy and also might have only a small effect on private saving.