The nature of policy-making, Microeconomics

The Nature of Policy-Making:

It follows that recommending policy must itself be a subjective exercise. The effects of particular-policies at a particular historical juncture will depend not only on the values of current measurable variables, but also on knowledge of the current psychology of economic agents. Moreover, it will depend on how we organise and interpret the historical evidence of different instances in the past in terms of the light they throw on present circumstances.

According to Keynes, the role of economic theory was not to provide quantitative predictions about the future. Rather, it provided a framework for thinking logically and in an organized manner about the problem under consideration. Past data on relevant variables could then be studied to obtain an idea about the nature of quantitative relationships that had prevailed in the past. However, in using such data for predictions about the future, it was necessary to make subjective judgments about the extent of similarity or dissimilarity between the present time period and different time periods in the past, not captured by objective measurable variables.

The above approach has two implications. First, choice between alternative models of the economy for present purposes cannot be made on the basis of historical data on measurable variables alone. That is, such choice cannot be made on purely quantitative grounds. Second, if there are few close parallels in history to present circumstances, then there exists little basis for objective predictions about the future. 

 

Posted Date: 11/20/2012 6:44:08 AM | Location : United States







Related Discussions:- The nature of policy-making, Assignment Help, Ask Question on The nature of policy-making, Get Answer, Expert's Help, The nature of policy-making Discussions

Write discussion on The nature of policy-making
Your posts are moderated
Related Questions

TREND AND STRUCTURE OF INCOME: Each sector of the economy employs natural, human and material resources and contributes to the aggregate flow of goods and services during a gi

Strong Domestic Economy: We have to realise that healthy export sector can be built up only on a strong and efficient domestic economic structure. A sound domestic economy is


Diversification  - Assume that a firm has a choice of selling air conditioners, heaters, or both of them. - The probability of it being hot or cold is 5%. - The firm woul


the demand and supply functions for goods are given by demand:Pd=50-3Qds and supply:Ps=14=1.5Qs. where p is the price of a pair of jeans, Q is the number of pairs of jeans a) calc

There are 2 brands of cell phones that are almost identical except for some minor features: the A-Phone and the Pomegranate. Part I Draw the demand curve for the A-Phone. Explain

#questionLook up the real GDP of the U.S. for the 4th quarter of 2007 and compare it with the real GDP for the 2nd quarter of 2012. What does this tell you about the performance of

The definition of a price maker is states as “firm with some power to set the price bcoz the demand curve for its output slopes downward”, that in effect, mean those firms with a d