Open AccessSTABILIZATION POLICY: MACROECONOMIC DIMENSIONS
Author(s) -
Anton Filipenko
Publication year - 2016
Publication title -
aktualʹnì problemi mìžnarodnih vìdnosin
Language(s) - English
Resource type - Journals
eISSN - 2663-8959
pISSN - 2308-6912
DOI - 10.17721/apmv.2016.128.0.105-114
Subject(s) - economics , aggregate demand , production (economics) , aggregate supply , stabilization policy , monetary policy , business cycle , aggregate (composite) , government (linguistics) , fiscal policy , function (biology) , term (time) , general equilibrium theory , macroeconomics , supply and demand , monetary economics , microeconomics , quantum mechanics , evolutionary biology , biology , composite material , linguistics , philosophy , materials science , physics
The article studies models and conceptions of stabilization policy that aims to reduce the severity of economic fluctuations in the short term. According to the economic science, production and employment fluctuate around their natural levels in the long run. The paper reveals, that stabilization policies are designed to defuse the business cycle phases, bringing production and employment to its natural level. It uncovers, that the main function of stabilization policy is to limit short-term deviations in the system of long-term market equilibrium.This is done in the form of aggregate supply – aggregate demand by establishing relationships between potential output and prices of production, on the one hand, and the relationship between aggregate demand and industrial production prices – on the other. The government’s instruments are fiscal and monetary policy, which maintains high and stable levels of economic activity.The article outlines, that the best option for stabilization policy is to stimulate aggregate supply and use only certain aspects of aggregate demand in the absence of real prerequisites for its improvement under current economic conditions. Therefore, neoclassical paradigm and monetary concept should be taken for the basis of stabilization.