Economists generally fall into three groups: monetarists, Keynesians and
classical.
MONETARISTS, who believe that the money supply and monetary policy
largely explain course of the economy, interest rates and inflation;
KEYNESIANS, who believe that the linkage between government fiscal
policy, the financial markets and interest rates largely explains the economy
and inflation; and
CLASSICAL economists, who believe that both monetary policy and
fiscal policy have an impact.
The are other economic "schools of thought", including the "rational
expectations" school that believes that any government policy will be
understood by the market and thwarted. Business cycle theorists believe that the
economy moves in short- and long-term cycles which dictate the course of the
economy and interest rates. "Supply siders" believe that as long as
the means of productions are left to produce unfettered by taxes and regulation,
everything will be healthy economically (they were Ronald Reagan's favourites). |
