ECONOMICS 576
Rational
Policy Making
I. Essentials of Rational
Policy Making
A. Selection of objectives
B. Design of policy
instruments
C. Theory of relationships
among relevant variables
II. Consideration of Steps in
Rational Policy Making
A. Objectives
1. Selection process
a. Normative aspects
of process
b. Priorities
c. Dynamic nature of
process
2. U.S. National
Economic Objectives
a. High
employment/minimizing unemployment
b. Price stability
c. Economic growth
d. International
economic/financial stability
e. Other
B. Instruments
1. Fiscal Policy Tools
a. Taxation
b. Transfers
c. Government
purchases
2. Monetary Policy
Tools
a. Reserve
requirements
b. Discount rate
c. Open market
operations
C. Theory
1. Nature of Theory
2. Role of Theory in
Policy Making
3. Schools of Thought
a. Classical
b. Keynesian
c. Monetarism
d. Supply Side
e. Rational
Expectations
(New Classical
Macroeconomists)
f. Neo Keynesians
III. Measuring Economic Activity
A. Unemployment/Employment
1. The Statistics
2. The Concept
B. Price Movements
1. Consumer Prices
2. Producer Prices
3. GDP Prices
C. Economic Growth
1. GDP
2. Industrial
Production
3. Other measures
D. International
Economic/Financial
1. Trade Balance
2. Exchange Rates
3. Other
E. Financial Variables
1. Money Stock
a. M1
b. M2
c. etc
2. Interest Rates
a. Prime
b. Discount
c. T-Bills
(primary/secondary)
d. Other Treasuries
e. Federal Funds
f. Other
F. Other Indicators of
Economic Activity
1. Housing Starts
2. Index of Leading
(Lagging) Indicators
3. New Car Sales
4. Inventories
5. Durable Goods Orders
6. Retail Sales
7. Capacity Utilization
8. New Home Sales
9. Existing Home Sales
10. etc