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文章概要 宏观经济政策是指国家或政府有意识有计划地地采取的政策，以进一步调控宏观经济运行，达到其政策制定的目标。本报告主要讨论了宏观经济政策潜在的影响力，这些潜在的影响力主要是由于经济的不合适运营造成的。在研究欧洲经济历史的过程中,我们可以发现这样一个事实,通货紧缩是不合适的宏观经济政策的反映,这经常会造成抑郁。同时,本文也指出美国正在运行一些严重的不合适的宏观经济政策,从而导致了1929年到1933年的大萧条时期。
目录 文章概要1 前言1 通货紧缩导致抑郁症1 美国大萧条的原因2 结论3 参考表3
前言 像我们所看到的这样，,政府通过实施宏观经济政策促进经济发展，对经济发展方向产生了至关重要的作用。本文主要是研究欧洲通货紧缩和美国经济运营中不合适的宏观经济政策。
Unsuitable Macroeconomic Policies Leading to Depression
Executive Summary Macroeconomic policy refers to the policy adopted by a country or government consciously in a planned manner to regulate and control its macroeconomic operation further to reach its policy target. This report mainly talks about potential impacts caused by unsuitable macroeconomic policies on economy. After studying European economic history, we can find out the fact that deflation is the reflection of unsuitable macroeconomic policies, which tremendously contributes to depression. At the same time, this paper also points out some serious unsuitable macroeconomic policies carried out in America, which leads to the Great Depression from 1929 to 1933.
Table of Contents Executive Summary 1 Introduction 1 Deflation Leading to Depression 1 Causes for the Great Depression in America 2 Conclusion 3 Reference list 3
Introduction As we can see, macroeconomic policies adopted by a government play a vital part in its economic development. This paper mainly makes researches on European deflation and unsuitable macroeconomic policies practiced in America.
Through studies on unsuitable macroeconomic policies of policymakers, it is safe to arrive at a conclusion that if a regime is no longer suitable for a country’s development, sometimes even outdated; it is advisable for policymakers to abandon it. Otherwise it will seriously hamper economic development and bring huge damages to the country’s development from many aspects, such as low production, high unemployment, imbalance between import and export, irrational distribution of natural resources as well as social instability. Regarding this, constructive lessons can be learnt from this paper. Deflation Leading to Depression Early in the 19th century according to gold standard, the number of issuing bank notes was totally based on the reserve of gold, as a result of which, bank notes, to some extent, became a substitute for gold. (Robert J. Barro and Vittorio Grilli,1994). On account of the fact that the supply of notes at that time was totally bond up with the production of gold. Therefore, the production of gold took place of gold’s supply in a sense. However, the backward technology and limited natural resource casted a major barrier to the increase of gold’s supply, which further affects the number of notes circulating in the market. As the rising demand for notes caused by vigorous economic momentum, obviously, the outmoded monetary policies is no longer applied to the requirements of the real economy, in the wake of which, deflation came into being. The devastating consequences of deflation involved in many aspects. The purchasing power of customers decreased tremendously due to high unemployment which in turn imposed restriction on the capacity of production in a company. From what have been discussed above, unsuitable macroeconomic policies indeed do great harms to a country’s development.
Causes for the Great Depression in America The huge losses brought by unsuitable macroeconomic policies evidently displays to us that obsolete regime should not be employed in the context of modern economy. The Great Depression is the inventible result of blindly hanging on to the theory of classic economics which adheres to economic liberalism for a long time. However, the Great Depression mercilessly tears the veil of classic economics away, showing the world defects and limitation of classic economics. #p#分页标题#e#
On the assumption of market economy filled with free competition, economic liberalism sticks fast to the economic policies of freedom and no interference by the government and its central idea is that capitalist economy is able to offer job to every citizen by means of self-regulating, which has been put in an awkward situation by severe economic crisis and huge unemployment and prompts economists to make analysis of the causes for depression.( Wallis, Hohn Joseph ,1999), Combining the market situation at that time and the economic policies pursued by the policymakers together, we are able to find out that the free economic policy is not suitable for the market of the day. Before the outbreak of economic crisis, the American government held fast to the mainstream opinion of market self-regulating and then according to which, carried out a series of economic policies, such as strictly controlling the issuance of bank notes, abiding by the principle of financial and fiscal balance, and acting the role of bystanders doing noting when were confronted with serious market situation of massive bankruptcy among banks and enterprises of different sizes.
Then the stock market crashed. (Beaudreau, Bernard C. 1996), President Herbert Hoover is a policymaker of that kind, sticking to traditional economic liberalism, objecting to government interference, the very kind of such unsuitable macroeconomic policies fueling the expansion of economic crisis. (Andrew Atkeson and Patrick J. Kehoe , 2001),Keynes points out that American economic bloom of that day was the product of several factors. On the basis of massive advancement of automobile and electronic appliance industries, American economy was deeply affected by the aberrations of demand and supply meanwhile under the push of real estate fever. In 1929, decreasing investment took place throughout the year. From 1929 to 1932, the total amount of private investment plunged from 15.8 billion to 0.9 billion all the way. With regard to the tough situation of imbalance between personal consume and investment in production. It was high time that government interfered in the economic development, employing the fiscal policy and bearing the responsibility of stabilizing economy and increasing effective demand.
When slopping economy gave a hint that it was bound to be aggravated into the Great Depression, for the government’s part, it should have adopted expansionary fiscal policies, reducing income tax and increasing government expenditure to stimulate demand for investment. However, all the facts proved that the fiscal policies put forward by US federal government were not able to change the tough situation, only leading to deflation. In December, 1930, Hoover came up with a public project program with investment of 116million. ( John Steele Gordon ,2007).This amount of investment compared to the decrease in the private investment was far enough. To solve this problem, tax had been increased to meet the expenditure of government for the purpose of pursuing fiscal balance. This negative, constrictive fiscal policy did not ease the crisis, but to make the current economy even worse. Since Franklin Roosevelt taking office, a series of expansionary fiscal policies had been put forward to increase the government spending, especially to construct public projects such as building Tennessee water conservancy engineering. Even through, some critics deemed that the vigor of this policy was not strong enough, there is no deny in its active role in increasing economic demand, decreasing unemployment rate and mitigating crisis.
As it points out above, when obsolete regime is no longer suitable to modern economy, it is advisable for policymakers to discard it and establish a new regime that is favorable to modern economic development.
Conclusion This report puts emphasis on the importance of suitable macroeconomic policies applied in modern economy. As changes take place in our daily life all long, as for the outdated regime which has been used for a long time, all it brings to us are disadvantageous fiscal policies made by policymakers who firmly stick to the regime. Inevitably, great damages are likely to be brought about due to unsuitable macroeconomic policies, such as deflation, increasing income tax to pursue fiscal balance. All these are major causes for depression.
The reason why we arrive at such conclusion is from analyzing the big events once happened in history, European deflation policy, blindly increasing income tax to pursue fiscal balance and adopting deflation policy in America as a result of which lead to the Great Depression from 1929 to 1933.
Reference list Andrew Atkeson and Patrick J. Kehoe (2001),The Federal Reserve Bank of Minneapolis, Deflation and Depression: Is There an Empirical Link? Beaudreau, Bernard C. (1996), Mass Production, the Stock Market Crash and the Great Depression. New York, Lincoln, Shanghi: Authors Choice Press. John Steele Gordon (2007)"10 Moments That Made American Business," American Heritage, Robert J. Barro and Vittorio Grilli (1994), European Macroeconomics, chap. 8, p. 142 Wallis, Hohn Joseph (1999), National Bureau of Economic Research. ‘The Depression of 1839 to 1843’ |
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