Micro/Marco economic reform (1 Viewer)

[powlmao]

What are some examples? (short listing is something I would like)

 

[enoilgam]

Some examples of microeconomic reform could include:

The introduction of a comeptition policy
Deregulation of a certain sector in the economy (for example, the banking industry)
Reduction in protectionism
Introduction of taxes towards a specific sector of the economy (i.e. the MRRT)
Introduction of the GST in Australia

I am not too sure about macroeconomic reform, but I think maybe the floatation of the dollar in Australia could be an example of one.

 

[gnrlies]

Some examples of microeconomic reform could include:

The introduction of a comeptition policy
Deregulation of a certain sector in the economy (for example, the banking industry)
Reduction in protectionism
Introduction of taxes towards a specific sector of the economy (i.e. the MRRT)
Introduction of the GST in Australia

I am not too sure about macroeconomic reform, but I think maybe the floatation of the dollar in Australia could be an example of one.

The first step here is to make a distinction between macro and microeconomics.

Microeconomics is all about economic principles - things like you should continue to produce goods and services until marginal benefit = marginal cost (i.e. the benefit from doing something should be more than those cost for you to do it).

Macroeconomics is all about the aggregate effects of these economic principles - so things like why does Australia run a current account deficit, why do we have inflation, what are the key drivers of economic growth.

Now, Macroeconomic policy and Microeconomic policy are commonly used terms used to describe the economic policies of the government of the day. Essentially they each refer to policies that concern both macro and microeconomics.

Macroeconomic policies are those that attempt to influence aggregate outcomes - such as the RBA increasing interest rates to reduce inflation the the government running a budget deficit to stimulate economic growth.

Microeconomic policies are those that attempt to improve the functioning of markets by improving the ability for microeconomic principles to work their magic, that is, to let free markets work. The government may also introduce some policies that attempt to address perceived market failures however these are not typically refered to as microeconomic policies.

Usually however Microeconomic policies are thought of in terms of the key reforms that have liberalised markets over the last 30 or so years. Reforms are essentially key programs that a government implements to change the way it does something (i.e. the way it regulates a market). That is to say that microeconomic policies are often microeconomic reforms. Competition policy is a key example in Australia (the Hilmer review offers some interesting reading if you want to learn more).

We would NOT normally use the term ''macroeconomic reform'' because it does not properly describe what we are doing when we adjust interest rates or implement fiscal strategies - here we are simply using our policy instruments, I.e. we do not 'reform' when we conduct macroeconomic policy whereas we do reform when we implement microeconomic policies.

The floating of the dollar is given as a possible Macroeconomic reform. This is better described as a microeconomic reform because it allows market principles to work in the foreign exchange market. Even where reforms to our macroeconomic policies takes place - for example a shift from monetary targeting to inflation targeting - we are still not really doing something that we might describe as ''macroeconomic reform''.

Here are five mircoeconomic reforms that have been important in Australia

- Labour market reform
- Financial market liberalisation
- Competition policy reform
- Seamless national economy reforms
- SOE reform

 

[enoilgam]

We would NOT normally use the term ''macroeconomic reform'' because it does not properly describe what we are doing when we adjust interest rates or implement fiscal strategies - here we are simply using our policy instruments, I.e. we do not 'reform' when we conduct macroeconomic policy whereas we do reform when we implement microeconomic policies.

Thats why I was a little confused with macro reform - I was going to say fiscal policy and monetary policy but thats not really reform per se.