In macroeconomics, what is the disagreement in the debate over policy activism versus policy rules?

Question

In macroeconomics, what is the disagreement in the debate over policy activism versus policy rules?

Answer 1

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Policy activismis the argument for State/ Govt. intervention in the various markets especially through monetray and fiscal policies that are utiliosed with lot of discretion by the economic administration arm of the Govt. and the central Bank. This is influenced largely bu the thinking of Keynes in the context of State role in lifting economies out of recession and depression and the socialist idea of creating economic justice wnd ecopnomic growth through State initiative. Those who want uules based economic policy argues that policy activism are not likely to be successful except under special circumstances and except in the shortterm, generates more problems and new probblems that it solves, may be induced by political considertion rather than by economic logic and doomed to failure in the long run.