Research Overview: Macroeconomics and Policymaking
Introduction
Definitively, macroeconomics is an economics component focusing on the decision-making, structure, performance and behavior of an economy in its entirety. To this end, this branch of economics pays particular attention to the economics of a nation, region and the whole world. Just like the mother group economy, macroeconomics features various concepts including output and income, unemployment, and inflation and deflation. In charge of controlling this collection of thoughts are three primary models: aggregate demand-aggregate supply, IS-LM and growth models. On the same note, this whole system depends on monetary, fiscal and comparison policies among others for its regulation. With that in mind, the following discussion seeks to delve into various concepts in macroeconomics. To do this, we will summarize, evaluate and analyze three articles, then discuss the interconnection between them and the entire field of macroeconomics.
Detailed Summary and Discussion of the Articles
The Evolution of Economic Policy Making in Africa. According to Jerome Wolgin, since 1983[1] African countries have been involved in an economic structural adjustment process. With the help from the political sector, a range of policy reforms such as foreign trade regimes, privatization, liberalization of foreign exchange and reduction of budget deficits have taken center stage over the years. This article concentrates on the obstacles of economic policy reform in the sub-Saharan Africa and various lessons that are evident from such transformations. Historically, most countries in this part of Africa were facing a steep economic decline in the 20th c[2] entury. After struggling with negative per capita and a GDP fall, it was time to take action. However, to fulfill such a quest, various causes of the economic meltdown had to be identified. As it would later emerge, most of the countries emphasized on nation building at the expense of economic growth. Besides, the political leaders at that time embraced socialism and building their political clout rather than continuing the development earlier started by the colonialists. Finally, the colonialists had put stable mechanisms to ensure a constant flow of resources to their origins draining the countries of their national resources.
Besides, a myriad of drawbacks also ganged up to thwart any rational policymaking efforts. The primary obstacle, in this case, was misplaced ideologies. Market distrust and upholding of the state as the sole agent of change were some of the weights that pulled the African economy down the slopes. Secondly, interest groups also enjoined to deprive African nations of their much needed economic upsurge. Political groups, labor unions, and bureaucrats pre-adjusted the policies for selfish reasons. Thirdly, policy-making also suffered setbacks due to ignorance. The key players in the policy making at this time- political leaders- plagued this noble course with myths, misconceptions and miscomprehension of the most fundamental facts hindering a positive change. Fourthly, political risk features at the center of this quagmire. Current leaders already prepositioned themselves for a longer stay in offices and would not allow any policy they deemed a hindrance to their political ambitions. Finally, political liberalization also played a vital part in obstructing the course of rational policymaking. Even though it set a firm foundation for long-term institutional policymaking, it weakened short-term policy implementation ability.
However, with the help of regulatory bodies, Africa’s economic policy curve is rising slowly but steadily. Even so, the internal rigidity by the leaders to accept the reforms by, for instance, the IMF, is still a major stumbling block for positive policy implementation. But from its past encounters with the colonialists, Africa’s skepticism with regards to economic policy implementation cannot be blamed entirely on the leaders. As such, the only solution to this is the concept of ‘ownership’ where the African leaders themselves accept the responsibility for policy reform. That said; ownership requires a stable, secure and conducive political atmosphere- transformational leadership. Interestingly, most of the African nations are currently embracing this concept, and positive results are already evident. With a fast maturing political atmosphere and a civil society explosion, one can only prospect a public policy subject to economic growth.
Citizen Movements and Technological Policymaking in Germany. In this article, Carol Hager evaluates the relationship between institutional politics and grass-root citizen mobilization in Germany. As she notes, the said mobilization has faced a plethora of challenges notably democratizing movements to technology. Protests arose with the citizen citing their neglect in technological decision making. However, the introduction of informed political participation has reversed the situation. The citizens have now redirected their efforts to the development of alternative forms of politics that can harmonize participatory democracy and technical competence.
Unexpectedly, early 1970 saw mushrooming of antidevelopment protests throughout West Germany. The mass was opposed to mega projects of airport runways, industrial evolution and nuclear power plants mostly state endorsed. What begun as opposition to environmental degradation quickly generated into a democratization dispute. Besides questioning the legitimacy of the institutions entrusted with these projects, the protesters wondered why they were not included in the decision-making process. On the brighter side, the multifaceted protests resulted in mega transformations in public policy. In addition, the opposition broke the bonds of technocratic policymaking that excluded the citizen from participating in the projects that directly affected them. In connection with this, policymaking and services improved in the face of increased protests.
After delving deeply into the situation, the legitimization problem was the chief cause of citizen revolt. When the leaders resorted to expert help excluding the citizen from participation in major state projects, the citizen lost hope in their leaders. As such, the disgruntled citizens saw no need in parliamentary methods of conflict resolution, the only option was violence. With the help of activists, the charged and openly unhappy citizens sought to assume their constitutional mandate of monitoring the government’s deeds. As has already discussed, these protest had significant influences in technological advancement. After witnessing a slowdown in their initiated projects, it was time for the leaders to change their view on citizen involvement in projects.
As a result of the waxing rate of protests, West Germany’s economy started waning. In the backdrop of this seemingly inevitable fall, the German political administration provided two institutional routes for the participation of the citizen. The first means was through the administrative courts, and the other was the parliament. Pushed to the very limit; the citizens who would obviously never trust parliament, formed movements aimed at breaking the glaring bureaucracy.
In the end, the citizens had the last laugh. With a relatively wild political atmosphere, the government began to solicit for citizens’ trust for the existing institutions including the parliament. By staging charged protests, the political system considered a decision-making process that included the citizens previously excluded. Parliamentary discussion forums came into existence, and the activists dominated most of the government’s decision-making institutions. From these grass-root protests, instead of plummeting, the technology showed, and is still showing an upward trend. Conversely, citizen mobilization led to the betterment of institutional politics hence the entire economy.
Global Imbalances and Economic Development. The focus of this article, according to Igor Paunovic and Juan Carlos, is to shed some light on global imbalances through a unique approach. In this case, the coverage deserts the usual sustainability aspect of the inequality and embraces the structural nature of the same. Consequently, four global imbalances are identified: saving-investment imbalance, insufficient global public goods, capital versus labor mobility, and financial capital dominance versus productive dominance. Regarding Latin America, an examination of the leftist governments reveals all the constraints they face in light of this background.
Apparently, the recent past has witnessed an unprecedented surge of leftist governments due to economic and political reasons in the Latin America. The primary facilitator of this situation is the downward trend of the region’s economy since the 1980s. Also, poverty was another causative agent of the economic discontent. Previously affecting up to 38.5 percent of the total population, the current rate is somewhat lower. Finally, extreme economic equality is also linked to the extensive poverty in the region. As revealed in the article, this is the world’s most unequal region. Moreover, external shocks make Latin America prone to sudden but severe economic crises like the 1995 Mexican crisis. Lastly, physical insecurity and little priority directed to the region also choke the area’s growth and spur economic imbalance.
As a counter response to the biting Global Imbalances, the leftist governments in the Latin America have engaged in a series of economic policymaking. Though still in the making, a pattern is emerging among the various leftist governments that point to a positive change. Central to this policymaking change is the embracement of democracy by a majority of the states. Previously plagued by numerous instances of economic shocks, the region is nowadays more focused on the positive rate of growth and employment as opposed to the previous fiscal deficits and inflation.
At the same time, the leftist governments are instituting thorough efforts aimed at reducing the region’s vulnerability to external shocks. One policy to facilitate this dream is the minimization of foreign public debt; ring led by Argentina. Alongside the aforementioned collection of efforts, the region is also working on redefining its international economic relations. Such transformation is characterized by the lack of renewal of the previous IMF contracts and complete settling of IMF loans and any other debts that may upset economic growth. In conclusion, there exist four major global imbalances in the economy of the world. However, their structural nature obstructs the path to a faster correction of economic nightmares. However, with the current rapid spread of the leftist governments in the Latin America, and subsequent policymaking, the economic state of the region is on the right path. Even though still grappling with the past challenges, most of the governments have succeeded in managing their economic imbalance.
Importance of the Articles to Macroeconomic Theory
Either way, all these three articles are a wholesome representation of macroeconomics. In other words, the element of region, nation and the world is evident; moreover, all of them focus on the structure and performance of the economies. But that is somewhat a general importance. Specifically, the first article about the economic policymaking in Africa is a reflection of the changes in the economy of the region over years. Besides, the article provides the history, changes and international intervention into the economy of the continent. Finally, we learn about many suggestions that the continent can apply to better their economy through decisive policymaking.
As for the second article, the major issue is the importance of citizen participation in the economic development of a nation. Previously bureaucratic and would not factor in the citizens’ decision in their technological projects, the German government later learned their major undoing. After a series of grass-root protests and revolts, the government finally gave in to the demands of the citizens. As you would expect, all the technological projects, which had a direct impact on the citizens and their economy, just got better once the citizens got involved. Finally, the last article is more of a reiteration of the situation in Africa. In this case, just like that of Africa, the Latin America previously had falling economy until the leftist governments took charge and sought to reverse the situation. To succeed, they had to explore a host of options with alacrity to turn the tables. Even though the change is gradual, at least the efforts are already bearing fruits.
Connection between the Articles, Expectations and Policymaking to the Main Topic- Macroeconomics
Needless to say, Expectations and Policymaking are correlated with macroeconomics, and to the economics as a whole. In essence, expectations refer to the conditions set to gain internal consistency in various macroeconomic models. On the other hand, policymaking refers to the government’s decisions on matters economy. The policymaking process is subject to the conditions stipulated in the expectation, so already; there is a link between the two concepts. But how are these expectations and policymaking connected with macroeconomics?
Well, for one, the theory of expectations is entirely concerned with an optimal future forecast for a particular economy. That is, an evaluation of the current state of an economy, determining the changes and setting conditions to improve the future state of that particular economy. Now, from the definition of macroeconomics above, it safe to claim that expectations are tools of macroeconomic models which directly affect macroeconomics. In the article about Latin America, for example, the expectations of the leftist governments were to restructure the macroeconomics of the region through a myriad of policies. Likewise, policymaking is connected to macroeconomics by supporting any macroeconomic processes. Through fiscal and monetary policies, the principal aim of policymaking is to align a region’s macroeconomics with that of the world for a better economic future. Together, with policymaking come interest rates, central banking actions and other regulatory undertakings. But as we saw in Germany through the article, policymaking is not entirely dependent on the government. The decisions affect the citizens, so, their input is as vital. Such an insinuation is further supported by the economic consequences the German government faced in the face of the unrests.
Conclusion
So the bottom line is macroeconomics, as a component of economics, is dependent such factors as expectations, policymaking, labor supply and productivity, and the monetary rules. Even though the government has a significant stake in all the decisions concerning macroeconomics, citizen participation is just an equal consideration. Notably yet, is the impressive macroeconomic trends of the regions discussed in the articles. Finally, it is evident that with comprehensive policymaking, a region’s economy can be greatly ameliorated