Economic policy

Under the economic policy refers to the totality of the measures which the State intervenes in shaping and regulating the economy. Economic policy defines the rules within which the largely privately organized economy can flourish with all its different stakeholders.

Theory of economic policy

The theory of general economic policy is a branch of economics and deals with the principles of organization of economic systems and economic processes. It is divided in Positive Economics and Normative Economics. Positive economics describes and explains the economic situation ( diagnosis) and tries to predict future developments (prognosis). The normative economics deals with target systems, goal conflict and goal-means relationships and derives recommendations for the policy from.

Types of economic policy

Basically, economic policy is divided into planning policy, structural policy and process policy. The former focuses on the conditions under which economic agents make their decisions, second consists includes interventions in the regional and sectoral industry structure, the latter is characterized in that the state actively intervenes in the market processes.

For planning policy in particular is one of the competition policy. For structural policies include infrastructure policy, regional and sectoral structural policies. For process policies include labor market policy, fiscal policy, fiscal policy, monetary policy, trade policy, economic policy.

For economic policy are also the areas of social policy and monetary policy.

Economic policy directions

The two main directions are the

  • Supply-side policies ( supply-side economics ), wants to limit the economic policy largely on regulatory policy, as well as the
  • Demand management (demand -oriented economic policy ), which represents an active process policy.

Target system of economic policy

In the target system of economic policy, there are many different goals:

  • The ultimate goal of economic policy, such as the common good, the maximization of social welfare The main economic policy objectives Maximization of economic welfare stability objective High level of employment
  • Price level stability
  • Increase in real per capita income ( " quantitative growth " )
  • Improved supply of public goods ( " qualitative growth " )
  • Promoting the adaptation flexibility of the offer
  • Approximation regional wage, residential and recreational values
  • (Power ) righteous distribution of income and wealth distribution
  • Social justice, the distribution of income and wealth

Economic policy and objective relations

In the German Stability Act the simultaneous achievement of the four objectives of economic policy is required (see also magic square). Since the objectives listed under each other in mutual relations, a certain touch intervention in some way all goals, which leads to a barely manageable effect structure. However, there are different relationships between the objectives:

  • Trade-off ( trade-off ) or target competition exists when a measure an economic policy objective is, however, a disadvantage to another or it is detrimental. A promotion of a target that is at the expense of another ( see also Phillips curve ).
  • Target harmony exists when a particular policy measure two or more targets simultaneously serves.

Whether a trade or target harmony exists depends, among other things, from the time perspective (short - vs. Noncurrent) from. Thus, the goal of sustainability seems to have a conflict with the other objectives in the short term, because environmental protection measures cost money. In the long term however, there are objective harmonies.

The four quantitative objectives of economic policy are:

  • High level of employment
  • Price level stability
  • Economic growth
  • External balance

Qualitative objectives of economic policy are:

  • Distributive justice (§ 2 SachvRatG )
  • Environmental protection ( Article 20a )
Budgetary policy Juergen B. Donges Andreas Freytag Integrated Authority File
807895
de