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discuss whether it is better for a govt. to rise the economy's rate of productivity growth or to control its rate of inflation??? pls help me answer this question, Iam really stuck
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plss help me...
- Thread starter pavaniko
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For such an open ended question there can be no perfect answer, it is just too relative, until and unless you stick to the typical basics in a book
ask this question on this forum and you will get good answers
http://www.econpoint.com/forum.php
short/simple
http://www.investopedia.com/terms/p/productivity.asp
http://www.nber.org/digest/dec97/w6062.html
some research papers do deal with the question (read all) - great detail to write a very good essay answer
http://www.cato.org/sites/cato.org/files/serials/files/policy-report/1999/11/cpr-21n6.html
http://www.nber.org/papers/w6062.pdf?new_window=1
http://faculty-web.at.northwestern.edu/economics/gordon/bpea_meetingdraft_complete_051118.pdf
http://www.u-picardie.fr/eastwest/fichiers/art26.pdf
http://www.imf.org/external/pubs/ft/issues2/
this link is good as well maybe you might find the answer to your question here
http://www.voxeu.org/
John Sloman Chapters:-
Economic Growth in the Long Run
Aggregate Supply, unemployment and inflation
Some points to consider
Depends upon the situation of the country and the extent to which the measures will be taken (Also: why does the country need to take these two steps)
If a country has healthy level of real inflation generally around 5 then increasing the productivity is better since it will bring encourage investment form within and from foreign countries, via FDI and FPI, etc. More investment will lead to more businesses leading to more jobs, technological advancement, increased levels of education and expertise, population growth, increase in purchasing power, etc. However, this will increase the inflation a little bit but it will not be problem if the country monitors the interest rate, while taking into consideration that it is he interest rate that effects the loans, investment, business growth, etc.
If a country has higher level of inflation, the country could try to control the inflation but that would mean the use of Fiscal or Monetary measures, provided it is not using other measures such as price controls of products which has its own impact. While these measures will reduce inflation it will also effect the growth of the economy since incentive to invest will reduce, capital outflows will take place and jobs might be lost.
Do take into consideration the exchange rate, trade, GDP if you want to make the answer more comprehensive the more variables you add the more literature review (research papers) you will need to check.
ask this question on this forum and you will get good answers
http://www.econpoint.com/forum.php
short/simple
http://www.investopedia.com/terms/p/productivity.asp
http://www.nber.org/digest/dec97/w6062.html
some research papers do deal with the question (read all) - great detail to write a very good essay answer
http://www.cato.org/sites/cato.org/files/serials/files/policy-report/1999/11/cpr-21n6.html
http://www.nber.org/papers/w6062.pdf?new_window=1
http://faculty-web.at.northwestern.edu/economics/gordon/bpea_meetingdraft_complete_051118.pdf
http://www.u-picardie.fr/eastwest/fichiers/art26.pdf
http://www.imf.org/external/pubs/ft/issues2/
this link is good as well maybe you might find the answer to your question here
http://www.voxeu.org/
John Sloman Chapters:-
Economic Growth in the Long Run
Aggregate Supply, unemployment and inflation
Some points to consider
Depends upon the situation of the country and the extent to which the measures will be taken (Also: why does the country need to take these two steps)
If a country has healthy level of real inflation generally around 5 then increasing the productivity is better since it will bring encourage investment form within and from foreign countries, via FDI and FPI, etc. More investment will lead to more businesses leading to more jobs, technological advancement, increased levels of education and expertise, population growth, increase in purchasing power, etc. However, this will increase the inflation a little bit but it will not be problem if the country monitors the interest rate, while taking into consideration that it is he interest rate that effects the loans, investment, business growth, etc.
If a country has higher level of inflation, the country could try to control the inflation but that would mean the use of Fiscal or Monetary measures, provided it is not using other measures such as price controls of products which has its own impact. While these measures will reduce inflation it will also effect the growth of the economy since incentive to invest will reduce, capital outflows will take place and jobs might be lost.
Do take into consideration the exchange rate, trade, GDP if you want to make the answer more comprehensive the more variables you add the more literature review (research papers) you will need to check.