EFFECTIVENESS OF MACROECONOMIC POLICIES IN PROMOTING ECONOMIC GROWTH
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
EFFECTIVENESS OF MACROECONOMIC POLICIES IN PROMOTING ECONOMIC GROWTH
Chapter one
INTRODUCTION
1.1 Background of the Study
Historically, market mechanisms have failed to achieve general economic balance and stability. As a result, macroeconomic issues such as business cycles, inflation, deflation, stagflation, and unemployment persist on a regular basis.
As a result, the government is forced to implement policies to address issues as they develop. If governments are to participate in the economy, there is still the issue of selecting the appropriate instruments to achieve the goals they set for themselves.
Macroeconomics, first proposed by Ragnar Frisch in 1933 during the global Great Depression, is the study of relationships between broad economic aggregates.
It refers to the analysis of the national economy’s performance and the strategies implemented to improve it. The Oxford Advanced Learner’s Dictionary defines policy as a plan of action agreed upon or chosen by a political party, corporation, or other entity.
Macroeconomic policies are thus defined as government acts that have an impact on the overall performance of the economy. It can also be defined as a plan of action for controlling, regulating, and manipulating macroeconomic variables in order to meet society’s macroeconomic objectives.
According to Brooks and Evans’s words, “Macroeconomic policy can be thought of as an attempt by the authorities to achieve particular target levels of certain major economic aggregates” .
A macroeconomic policy is, in fact, an instrument for policing the economy (if that phrase can be used) in order to attain specific economic goals. The scope of macroeconomic policy includes all important economic factors.
Macroeconomic factors encompass both real and monetary variables. Real variables include Gross National Product (GNP), total employment, aggregate expenditure, savings, and investment.
Government expenditure, as well as tax and non-tax revenue, exports and imports, and the balance of payments. Monetary variables include the supply of money, the demand for money, the availability of credit, bank deposits, and interest rates.
Accordingly, there are two types of tools or measures for controlling and regulating macroeconomic variables: monetary measures and fiscal measures.
A few economists contend that “The need for macroeconomic policy arises because the economic system does not adjust appropriately to the shocks to which it is constantly subjected” . However, the role of macroeconomic policy was not limited to controlling business cycles; it was expanded significantly.
Before and after Nigeria’s independence in 1960, the Nigerian economy was characterised by a range of macroeconomic policies, not all of which succeeded in fulfilling the macroeconomic policies’ stated aims.
In recent years, the Nigerian economy has faced serious macroeconomic challenges, including a slowdown in economic activity, low capacity utilisation, rising unemployment, a heavy debt burden, accelerated inflation, intensified exchange rate depreciation, and a high and perverted interest rate regime.
1.2 Statement of Problems
Any development initiative aims to improve people’s standard of living. Macroeconomic objectives are intended to achieve this goal. As a result, macroeconomic policies and declared aims are functionally and significantly related.
The economy of emerging countries, such as Nigeria, is plagued by a slew of economic issues, including excessive inflation, unemployment, an unfavourable balance of payments, and several more.
Over the years, several macroeconomic policy instruments have been used to counteract these retrograde trends. As a result, the purpose of this study is to assess the success of macroeconomic policies in meeting predefined goals.
1.3 Significance of the Study
It is envisaged that this research will be both practical and theoretically significant, contributing to and expanding the boundaries of knowledge. There is no question that this study will benefit a large number of people.
In the first instance, the research effort will be tremendously beneficial to students’ academic pursuits. Second, professionals and policymakers will find it an excellent and useful tool in their efforts to develop policies.
Furthermore, this research will benefit the state by improving the effectiveness and efficiency with which policies are developed and implemented in order to achieve macroeconomic goals.
Need help with a related project topic or New topic? Send Us Your Topic