DEVELOPMENT OF THEORY AND PRACTICE OF STATE REGULATION
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Author(s): | Ishchenko T. L., Zagnitko S. N., |
| Number of journal: | 4(69) | Date: | November 2024 |
| Annotation: | The article discusses the basic principles of two fundamental theories of state regulation of the economy: Keynesianism and monetarism. Each school has an extensive theoretical and practical base, which made it possible to identify their impact on economic processes and the well-being of society. A comprehensive analysis of each economic theory made it possible to identify their postulates and a number of differences and similarities in the compared economic schools. The identification of patterns in the volume of money supply in circulation and the volume of gross domestic product make it possible to assess future changes in aggregate demand and predict an imbalance resulting in macroeconomic instability. The level of influence of each school on state policy will make it possible to identify priority tools for influencing modern economic processes, both from the state and from the Central Bank and corporations. The nature of government influence determines the vector of development of fiscal and monetary policy, which makes it possible to predict the level of inflation, unemployment, and credit rates. The chosen course of government regulation directly affects the volume of goods produced in the country and the level of aggregate demand. Focusing on the Keynesian school will increase the volume of reproduction within the country, due to the possibility of attracting additional financial resources by corporations and households. Reproduction must be provided by aggregate demand, which is impossible without an increase in wages and the number of jobs. An increase in inflation during the crisis is inevitable, but it is possible to equalize economic instability by creating conditions for corporations to develop from the fiscal and monetary policy of the state, while a high level of trust between the state and business is necessary. In contrast, the monetarist school is focused on the amount of money in circulation, which is able to balance aggregate supply and demand. | ||
| Keywords: | aggregate demand, inflation, unemployment, key rate, gross domestic product, economic growth, fiscal policy, monetary policy, price dynamics, money turnover, economic schools |
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| For citation: | Ishchenko T. L., Zagnitko S. N. Development of theory and practice of state regulation. Biznes. Obrazovanie. Pravo = Business. Education. Law. 2024;4(69):156—160. DOI: 10.25683/VOLBI.2024.69.1164. |
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