Proposal for a Governed Economy
This is the third of three chapters concerned with building a foundation of principles on which successful economic policies can be built. In chapter 10, it was argued that policies should be ‘appropriate’— that is, the policy-making institution, its goals, and its policy instruments must all be on the same ‘level’ in the economy. This implies that national governments should confine themselves to high-level instruments and goals. Examples of the latter are easy enough to identify. Appropriate and important goals are: full employment, price stability, and the productive use of all the economy’s resources. These are the ‘big numbers’ that we all wish to add-up better.
KeywordsFiscal Policy Policy Instrument Limited Liability Full Employment Balance Budget
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- 2.See the possibly devastating attack on Milton Friedman’s doctrines by David Hendry and Neil Ericsson, ‘Assertion without Empirical Basis …’, Bank of England (1984).Google Scholar