Overview

Since the time of Keynes macroeconomists have been concerned with the effectiveness of stabilization policies in reaching full employment. However no one has provided a convincing argument that this goal is universally desirable. Thus the book's main thesis is that Pareto optimality - the guiding principle of policy evaluation, because some gain and nobody loses - does not apply to macroeconomic policies and that full employment is essentially a political aim. The book is divided into three parts. The first is historical: it examines the limited literature on the optimality of macroeconomic goals and the record of successive governments in achieving the goals they have set. The second part presents a theory of the labor market, and an evaluation of walfare changes from rising or falling real wages. The concluding part looks at public choice decisions, especially those related to spending and taxation, from an individualistic perspective. Although originally intended to show what sacrifices are necessary in collective decisions, the aim is now to maximise your own benefit from government spending and to avoid as much of the burden of taxation as possible. The resulting free-rider problem' creates budget deficits which are no longer countercyclical but are tolerated because they have no adverse welfare consequences for the current population; instead they leave future generations saddled with extra interest payment on the accumulated debt. A number of possible ways of avoiding unnecessary budget deficits are explored without much hope for success.

Full Product Details

Author:   Martin Prachowny
Publisher:   Taylor & Francis Ltd
Imprint:   Routledge
Dimensions:   Width: 13.80cm , Height: 1.30cm , Length: 21.60cm
Weight:   0.453kg
ISBN:  

9780415107648

ISBN 10:   0415107644
Pages:   228
Publication Date:   16 June 1994
Audience:   College/higher education ,  General/trade ,  Tertiary & Higher Education ,  General
Format:   Paperback
Publisher's Status:   Active
Availability:   In Print  
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Table of Contents

Preface Introduction 1 The Theory of Macroeconomic Goals 1.1 The Pareto Optimality of Macroeconomic Goals 1.2 The Benefits of Full Employment 1.3 The Welfare Costs of Inflation 1.4 The Trade-off between Unemployment and Inflation 1.5 Summary 2 The Achievement of Macroeconomic Targets: U.S. Experience, 1948–90 2.1 U.S. Macroeconomic Performance, 1948–90 2.2 The Effectiveness of Stabilization Policy 2.3 Legislative Intent for Stabilization Policy 2.4 Implementation of Stabilization Policy 2.5 Concluding Remarks 3 The Market for Labor Services and the Macroeconomy 3.1 The Supply of Labor 3.2 The Demand for Labor 3.3 Equilibrium in the Labor Market 3.4 Disequilibrium and Unemployment 3.5 Stabilization Policy and the Labor Market 3.6 Types of Unemployment 3.7 The Empirical Relevance of the Model 3.8 Conclusions about Labor-Market Characteristics 4 The Welfare Economics of Macropolicy 4.1 Welfare Analysis in the Labor Market 4.2 The Possibility of Pareto Improvements 4.3 The Welfare Effects of Stabilization Policy 4.4 The Equity Argument 4.5 Democratically Determined Wages 4.6 Democratically Determined Macropolicy 4.7 Conclusions 68 5 Public Expenditures and the Private Interest 5.1 Government Demand and Industry Welfare 5.2 The Welfare of Producing Agents 5.3 A Measure of Industry Welfare Changes 5.4 A Case Study of Federal Government Purchases 5.5 An Alternative Explanation 5.6 Conclusion 80 6 The Macroeconomic Policy Apparatus 6.1 Individual Support for Public Choices 6.2 Government Activity as Zero-sum Games 6.3 Bias in Stabilization Policies 6.4 Improving the Policy Apparatus 6.5 Exploitation of Stabilization Policies 6.6 Conclusion

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Author Information

Martin Prachowny is Professor of Economics at Queen’s University, where he has taught since 1967, while holding visiting positions at MIT and LSE. He is the author of five previous books, the most recent of which is Money in the Macroeconomy (CUP, 1985), and many journal articles in the area of macroeconomic policy.

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