Business Economics

, Volume 43, Issue 4, pp 17–24 | Cite as

Encouraging Growth and Stability

Flexible Labor and Capital Markets, Low and Efficient Taxes, and Openness to Trade are Essential
  • Edward P Lazear


When significant government action is needed and sought, as in the current financial crisis and weak economy, it is easy to forget the underlying market principles that have made the U.S. economy the strongest in the world. Adherence to these principles is the surest path to continued economic growth and stability over the long run. Of particular importance are policies that allow flexibility in labor markets; free movement of capital, unimpeded by excessive regulation; tax rates that minimize disincentives for the development of human and physical capital; and liberalization of international flows of goods, services, and capital. Regarding the current credit crisis, its effect on the real economy has been amplified by falling asset prices and high oil prices. Policy will be continuously evolving, but the $700 billion stabilization package is an important step.


growth stability macroeconomics 

JEL Classifications



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Copyright information

© National Association for Business Economics 2008

Authors and Affiliations

  • Edward P Lazear
    • 1
  1. 1.Council of Economic Advisors, Executive Office of the PresidentWashingtonUSA

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