TCD M.Sc.(EPS) – Ronan LYONS – EC8001 Irish

Transcript:TCD M.Sc.(EPS) – Ronan LYONS – EC8001 Irish:
TCD M.Sc.(EPS) – Ronan LYONS – EC8001 Irish Economic Policy ISSUES & Context TOPIC C: The Economy & Economic Growth Module Outline Topic C: Structure The Economy & Economic Growth Conceptualizing the economy National income accounts GDP, welfare and public policy Efficiency and production possibilities Modern economic growth Productivity performance From Tactics to Strategy… Three main tools of economic policy were mentioned in Topic B Trade policy (τ)– historically tariffs; within EU/WTO, replaced by competitiveness policy Monetary policy (r) – concerned with currency, interest rates, money supply; within Eurozone, replaced at national level by macro-prudential policy Fiscal policy (G) – decisions about government revenues and spending; limits within EU but increasingly important But these are the tools – what are the aims? Aims of A Regional Economy The principal aim of an economy’s policymakers is to deliver a high(er) standard of living Most often measured through citizens’ average income Behavioural issues: relative vs. absolute, momentum Range of ancillary and secondary objectives Full employment – will be reflected in higher incomes Competitiveness – should be reflected in higher incomes Fair distribution of income – may not be reflected Stability – reflected in consistently high living standards (also: good/asset price stability) Sustainability – as above, but over longer time-frame (may be at odds with higher living standards over short run) Levels of Living Standards Source: Maddison Project Database (2013) Growth in Living Standards Source: Maddison Project Database (2013) European slow down Irish catch-up World’s Richest countries Features of the top 20 Luxembourg Singapore Brunei Darussalam Kuwait Norway United Arab Emirates Switzerland Hong Kong SAR United States Saudi Arabia Bahrain Netherlands Ireland Australia Austria Germany Sweden Canada Denmark Oman Size – big or small? Location? Island/landlocked? Resources? History? Real #1 is Qatar! Model of the entire economy How would you go about modelling an entire economy? Not as complicated as it sounds: ultimately, in an economy, there are only sellers and buyers Sellers provide a service Sometimes that service is a physical item, a commodity like copper or merchandise such as TV – but even then its value lies in the service it provides Buyers pay money in return A pre-Industrial Economy… Households No firms, so aside from subsistence production, households trade with each other through markets Markets sell goods buy goods A Modern Economy… 1. Firms sell goods that are bought by households Goods markets Households Factor markets Firms 2. Money flows