ABSTRACT
In thinking about macro-policy it is important to know the aims governments are pursuing and the instruments which are available to them in seeking out these aims. It is also important to have some idea of the kinds of disturbances to which an economy might be exposed, and against which policy action might have to be directed. Macro-policy framework
|
Macro-targets |
Macro-instruments |
Disturbances |
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Primary:Inflation, unemploymentand balance of payments (or reserve position) |
Money supply Fiscal policy Incomes policy Capital controls Interest rate structure Exchange rates |
Domestic demand Demand for money Foreign interest rates Domestic price (wage) Foreign real demand Foreign prices including an oil price shock |
|
Secondary:Size of budget deficit,interest rate, exchange |
