Objectives of Government Economic Policy

Macro – The Measurement of Macroeconomic Performance

In this course, Dr Paul Segal (King's College London) explores the measurement of the macroeconomy through its various indicators. In the first module, we outline the key objectives of government economic policy and how these may conflict. After that, in the second module, we cover the key macroeconomic indicators and caution against potential misinterpretations, particularly regarding certain indicators of inflation and wellbeing. In the third module, we continue on the theme of measuring inflation through the use of index numbers before turning, in the fourth module, to the requirements and limitations for judging living standards by using measures of national income. In the fifth and final module, we follow the macroeconomic performance of the UK and wider world over the last 20 years.

Objectives of Government Economic Policy

In this module, we think about five key objectives of government economic policy – economic growth, environmental impacts, price stability and inflation, unemployment and the international balance of payments – and the potential conflicts between some of these objectives. We focus particular on: (i) the definition and motivation behind these objectives; (ii) the differences in certain objectives in rich countries compared to low-middle income countries; (iii) the potential for economic growth to generate environmental damage; and (iv) the difficulty of combating inflation without suffering unemployment or lower economic growth.