One of the most important aspects of this course is to ensure that everyone is a
ID: 1115014 • Letter: O
Question
One of the most important aspects of this course is to ensure that everyone is aware of when and which model to apply. Economics was not always its own academic discipline, it was originally political economy. I hope that you now can see how individuals may find that they support different economic policy proposals based upon views that are rooted in the different models we have studied. Reflect on some of the major issues that drive discussion surrounding politics and economics. Now that you understand these various models, would you discuss matters differently? Have you thought that maybe you have viewed through the lens of an economic model that is not reflective of theory (healthcare, banking, or amongst large businesses)? Anything you would change?
Explanation / Answer
The economics always strived for effective allocation of scarce resources for the human well being. In this context it is not just an academic descipline, it was originally political economy. Different models in economics proposes various ways to address the common problems human society faces. The problem of poverty, unemployment, inflation, economic growth etc.. are dealth with help of different models. The knowledge of people, their belief systems play major role in choosing economic model best for the society or nation. For example the soviets felt the communist model of economy best suits their interest. While west have choosen capitalistic model. With in the broad political economic philosophies various models can be seen. For ex. keynesian model, solow growth model etc..
In this context the major issues that drive discussion surrounding Politics and Economics are
1) The poverty and unemployment.
2) The recession, depression and economic growth conditions of the country.
3) Inflation, demand and supply systems
4) economic inequalities in society etc..
Most of the economic models deal with the issue of poverty and unemployment. The solow model of economic growth proposes the improved productivity will increase the wealth and growth. There by creating employment and eradicating poverty. Where as the socialistic model deals in different manner by planned system of production and distribution.
As Various models are dealt in the course the understading on the political economy has changed. The people support various economic models from locus standi of individual or group. For example the high class individual support the capitalistic model while the poor support socialist. The middle class donot show much inclination for governmnet subsidising the poor.
Having understood the models, the application of these models need to be based on the economic situation and socio cultural setup of the nation. The specific conditions of the nation and requirements are to be considered while applying a model. There is no one size fit for all model for the same problems encountered. So the policy makers and economists are to be selective in application of economic model.
Yes, there are few aspects that were viewed in through the lens of an economic model that is not refelctive of theory. The exogenous models discusses that the growth happens through the exteral factor than the internal factor. For ex Solow model. This model neglect the basic human capital formation which can only be garnered by better health care and education. I used to believe the exogenous model of economy which have led USA to high echeleon of development. However the underlying factors are only understoods after study of thoery of human capital.
This created a renewed awareness on the theory and economic models. This will help in understanding the problems and conditions underlying, there by improves judgment regarding models.
Dear student, you may add few more models which were discussed in the class in broad frame work given, All the best
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