Effectiveness and Limitations of Economic Policies Chapter 18 is excellent summary of Topic 3 and Topic 4
Economic growth Trends – June qtr 2012 = % annual = 3.6% Policy response Microeconomic – long term Macroeconomic – short term Effectiveness and Limitations
Unemployment Trends – Aug 2012 = 5.2% Policy response Labour market reform (microeconomics) Monetary Policy/Fiscal policy Effectiveness and Limitations Structural problems
Inflation Trends – June qtr = 0.5% annual = 1.2% Policy response Competition policy Labour market Monetary Policy Effectiveness and limitations
External Stability Trends- June qtr CAD = -$13($ b) BoGS deficit $247m annual = -$ 40b Net foreign debt = $742b Net Foreign Liabilities = $880b Policy response Micro reform Fiscal Policy Effectiveness and Limitations
Distribution of Income and Wealth Trends – increasing gini co-efficient Policy responses Fiscal Policy Employment Effectiveness Incentive vs poverty
Environment Trends – Carbon Tax Policies Regulation vs market based International agreements Effectiveness ESD
Limitations of policies Time lags Fiscal Policy- short term (months) Monetary Policy- medium term (6-18 months) Microeconomic Reform – Long Term (20 years)
Political factors Election economics Pressure from lobby groups Senate obstruction
Global factors Globalisation and resulting external stability- exchange rates/CAD/FD External Shocks- oil prices and international business cycle International organisations and trade agreements
The Final Summary Pages