Aggregate Welfare Distortions and Foundations of Economic Policy
23 Pages Posted: 18 May 2020
Date Written: March 01, 2020
The basic objectives of any aggregate welfare program are threefold: efficiency, equity and stability. In this paper, I discuss how constraints are imposed in a natural way over these conditions such that aggregate welfare distortions arise. There are three mitigating forces, namely: fiscal policy, monetary policy and regulatory policy. These are characterized from context to context.
Keywords: Incomplete Markets, Incomplete Participation, Finance, Fiscal Policy, Monetary Policy
JEL Classification: O, H, P
Suggested Citation: Suggested Citation