Questions on Economics Essay Example | Topics and Well Written Essays - 1250 words

Questions on political economy - Essay ExampleThe prevailing trend, however, is that the traditional or mainstream approach in economics could be considered outdated. though it still should remain in the toolset of an economist, the emphasis on rationality as a means to run modern market debacles may produce variable results. Herein, some of the strengths and weaknesses of the mainstream approach will be suggested. Likewise, the crease of the mainstream approach, and the cognition that could be reaped from the utilization of some alternative approaches will also be pondered. If we are to cranny a definition for what is meant by the mainstream approach in economics we mean microeconomics (Coase, 1998, 72). In other words, the mainstream approach is that political orientation that was derived from the teachings of Adam Smith. In general, it is a viewpoint that favours limited government involvement, and the notion that market conditions fluctuate naturally and that rationality wil l balance the said. A few weaknesses of the laissez-faire view though include the position that an extreme condition of decentralization would be required in its pure form, and also that it simply analyzes the set points of supply and demand, as opposed to evaluating the factors which influence these (Coase, 1998, 72). ... A more proper manner of discerning the stipulation of microeconomics is that the evidence/theory ratio is currently very low in this field (Holmstrom & Tirole, 1989, 126). Thus, the ideal earthly concern is in discord with how real world reactions unfold, according to measurable economic aspects. Williamson (1994) calls out some special weaknesses of the mainstream approach as he condemns exclusive reliance on local or specific knowledge (Williamson, 1994, 324). Rather than calling for an abolition of the limited micro-focus and following a broader approach, he recommends appealing to both invisible- and visible-hand explanations, consequently this scholar c ould be classified as a moderate economist (Williamson, 1994, 323). Henry & Miller (2009) conducted an kindle analysis, wherein they present the platform that the rich countries are home to more stable economics since they have incentives to tenanted in productive economic activity (Henry & Miller, 2009, 261). Easterly (2008) likewise supports the notion that rich countries will break away to outperform the poor who lack much of the foundational structure needed for economic success. Some of these so-called incentives abduce to the heightened protection offered to would-be investors from the framework of English common-law, not to mention that such economies are less flat to government ownership (Henry & Miller, 2009, 261). As compared to the mainstream economic view, of Adam Smiths ideals, these pair would be quite opposite and peradventure in possession of a radical view that macroeconomic policies can exert a ample influence on the economy, especially when carried out at t he institution level (Henry & Miller,