Economic Policy Models Explained
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ScribdTranslationsEconomic Policy Models Explained
Translated by
ScribdTranslationsBolivarian Republic of Venezuela
Ministry of People's Power for University Education
Simón Rodríguez National Experimental University
Maturín Core
Logical formulations of economic policies
Facilitator: Participants:
José Rodríguez
Section: A
Maturín 8-11-202
Introduction
Within the scope of quality and productivity, there are formulations.
economic policy logics can somehow be defined as structures and
guidelines used when directing economic policies; they are tools
to simplify the relationship between the variables that explain the functioning of the
economics or part of it. They are essential for studying phenomena that are very
complex, focusing exclusively on the most relevant variables and simplifying
enormously the analysis. In this work, we will be delving into the model
of economic policy, the structural form, recursiveness and interdependence and the
localization.
The economic policy model can be defined as the set of guidelines and
guidelines through which the State regulates and directs the economic process of
country, defines the general criteria that support, in accordance with the overall strategy of
development, the fundamental areas and corresponding instruments of the system
national finance, to public spending, to public companies, to the linkage with the
global economy and training and productivity. All of this aims to create the
appropriate conditions and the global framework for the development of social policy,
the sectoral policy and the regional policy.
Economic policy model
they are tools to simplify the relationship between the variables that explain the
functioning of the economy or part of it. They are essential for studying
phenomena that are very complex in themselves, focusing exclusively on the most variables
relevant and greatly simplifying the analysis.
Its main function is to reduce the variables that influence an economic process to the
most relevant, thus simplifying the study and allowing its application to cases
potentially real.
Models facilitate the understanding of economic phenomena or processes.
extremely complex. There are many factors that can give rise to these
complications, such as resource scarcity, barriers and legal regulations or the
environmental restrictions. All of these aspects can make the study impossible.
of economic phenomena as a whole, as it would imply taking into account
too many variables at once.
Elements of an economic policy model
Three are the basic elements of any economic policy model.
The objective function of economic authorities.
As its name indicates, it is the function that represents the objectives that the authorities
economic objectives they aim to achieve. It is assumed that the objective function of the model of
Economic policy is the result of the aggregation of the preferences of all
private economic agents.
However, with the exception of models with representative (private) agents.
(understood as synonymous with models with identical agents), in which the process
Aggregation is trivial under the usual assumption of the homothety of the functions of
utility of individuals, the conditions that ensure the viability of such
aggregation processes of preferences both in the private and public sectors
they are not usually explicitly stated in the literature.
The model of economic policy.
It is the first of the two restrictions that can be included in a policy model.
economic. It is the one that economic authorities consider to be the real model of the
economy. It contains the set of equations that represent the functioning
general of the economy (resulting from the interaction of a large number of agents
private) to which the economic policy applies. Its specific format is a consequence
from the modeling strategy chosen by the economist.
The agents' expectations formation model.
This is the other fundamental restriction that must be considered in a policy model.
economic. This component of the economic policy model serves to express the
amount of information that conditions the decision-making processes of the agents and the
efficiency with which this information is used by the agents. Although this function
is part of the optimization problem from which the decision rules derive
the agents and it can be argued that it is a redundant component of the model
economic policy, we will opt for its explicit and differentiated consideration in the
economic policy model due to the importance of the different models of
formation of public expectations in the study of the possibilities and limits of the
economic policy.
Examples
Fixing the exchange rate of the currency against the currencies of other countries, promotion
of exportations or limitation of imports.
Structural form
The objectives of economic policy are chosen by an economist as the goal of their policies.
The economic policies that are acted upon are called active. And the policies
which arise as a consequence are called passive. When several types are chosen
economic policies, some are active and others are passive, are called policies
mixed. Economic variables are chosen for each policy objective. They are the
means how the results achieved by the economy will be measured by acting through
of politics, in pursuit of objectives. That is to say that a minister of economy has three
instruments: objectives, policies, and variables.
By choosing them with epistemological coherence in accordance with reality, you will have more.
possibilities of achieving the objectives one sets.
For example, if the minister of economy analyzes that, given the circumstances of the country,
it is advisable to act on the product, this action will be active politics. Consequently, we
employment and price stability will be affected. These will be policies
passive.
According to Tinbergen's model, a conceptual organization of policies is proposed.
economic. First, the authorities must specify the goals of the policies
economic, in terms of the social welfare function. Secondly, the
concrete objectives that are desired to be achieved. Thirdly, it is necessary to specify the
instruments that refer to the chosen economic policies. Fourthly,
modeling means proposing a model that connects the objectives and the instruments.
The economic models that are made explicit using statistics and mathematics have
great advantages. They have given the economy measurement tools and decision-making.
decisions.
However, to consider that they can be applied to all economic realities without
more analysis is a poverty in the understanding of social and political complexity,
cultural, historical that encompasses a society.
And not all decisions influenced by politics can be modeled.
economic, particularly those that are influenced by the freedom of the
human behaviors.
Economic policy decisions are the possible paths taken by a government.
when deciding on the economy of a country, a province, or a municipality. According to
square roure, policies are a set of defined goals in a well-established manner
determined and a set of measures that are considered appropriate to achieve them.
When taking economic policies from the perspective of internal decisions of
a country, fiscal policies and monetary policies are mentioned, the policies that
they apply to the relationship of the country itself with others, which is foreign trade policy and
exchange policies.
Fiscal policy
In Economics, what corresponds to fiscal policies began to be referred to as the activity.
from the Government. It includes revenues, expenditures, debt, and decisions
related to the transfer of funds free of charge. What is usually
understanding in everyday language on economic topics. It is possible to identify it with the
consolidated public budget that encompasses national jurisdiction, provincial and
municipal
Monetary policy
Monetary policies encompass the control exercised by the State through the Bank.
Central, about money and other monetary values existing at a given moment. The
the total available amount is increased or decreased according to the indications of the
Economic Policy.
Examples
Price setting, public finance, labor regulation, social protection, among others
others
Recursion and interdependence
Recursion is a system that in turn is made up of objects, also called
systems. In general, the fact that a system is a subsystem of a system
mayor establishes a hierarchy, just like any activity applied to the system does
it also applies to the supersystem and the subsystem.
Therefore, when talking about recursion, it is important to keep in mind that the elements
The components of the system that combine to form a subsystem must have synergy, that is,
to be a system in itself; and recursion is found in them when the system
and the subsystem has common characteristics that can be transferred from one to another.
Example
Company organizational chart: the company has a director who manages the deputy directors.
which in turn direct the department heads and so on.
On the other hand, interdependence refers to the set of reciprocal relationships that are
they are established among different people, elements, entities, or variables; that is,
when several individuals form an alliance to achieve a goal and each one
has a role or a task.
Example
A company is nothing more than a group of people linked by interdependence.
that perform different but complementary tasks, but work towards a common goal
common.
Localization
Economic policies are specific to each country or region, as they adapt to
the characteristics of the area in which they are applied, and it is usually not possible to obtain
identical results testing them in the same way in two different countries. In
reality, there are social, geographical, or ideological factors that make each country unique.
unique.
However, depending on the ideologies and economic approaches of the whole
world, different positions can be found on how much one should intervene
government in the economic life of your country.
International organizations like the International Monetary Fund (IMF), the
The Federal Reserve and the World Bank influence decision-making on
certain economic policies. Likewise, economic policy is
closely linked to the ideological and political trends of the world
represented by the political powers of each country.
Conclusion
Bibliography
Economic policy model
[Link]
Recursion
It is a conglomerate of
systems, Information Systems, etc
Interdependence
[Link]