Macroeconomic Dimensions of Public Finance: Essays in Honour of Vito Tanzi

By Mario I. Blejer; Teresa Ter-Minassian | Go to book overview

2

MICRO AND MACRO ASPECTS OF FISCAL POLICY

Richard A. Musgrave1

Fiscal policy—interpreted broadly to encompass tax, expenditure and debt policy—has multiple objectives, including micro as well as macro concerns. How do its micro goals, such as the provision of public goods and adjustments in the state of distribution, interact with its role in macro policy, bearing on employment, inflation and growth? More basically, is the distinction between micro and macro issues a valid one? According to textbook practice, micro economics addresses the behavior of individual agents, relative prices and the allocation of resources, while macro addresses the behavior of economic aggregates. But with aggregates the outcomes of micro behavior, does macro analysis offer more than an exercise in aggregation? It does so, and for various reasons.

For one thing, the interaction of individual choices in the course of aggregation is a complex one, even in a setting where markets clear. For another, aggregate outcomes such as the economy’s rate of growth, the pattern of factor shares or the distribution of income are not explicit targets of micro intent. Yet they are of interest to public policy and deserve examination. Most important in our context, macro outcomes assume a life of their own in a setting where strategic markets do not clear and the micro behavior of individual agents fails to add up to their desired result. Where imperfections in the market for a particular product may cause limited damage to the efficiency of a specific resource use, market failure at strategic points of the system, e.g. a failure of interest rates to clear the supply and demand for loanable funds, may generate a much larger performance failure. Corrective macro instruments, including monetary and fiscal measures are then called for.

The role of fiscal policy and indeed the consequences of fiscal behavior thus depend on the macro as well as the micro functioning of the economy. But where micro analysis has moved along a steady path, macro models have remained in a state of flux, as have perceptions of the macro role of fiscal policy and the interplay of micro and macro concerns.

-13-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Macroeconomic Dimensions of Public Finance: Essays in Honour of Vito Tanzi
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 506

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.