Simply put, public economic policy could be considered as the decisions made in relation to the economic well-being of the citizenry. According to William Bellinger (2015), the economic policy of a particular government covers several segments. For instance, the policies cover systems put in place for the collection of taxes at different levels, the national ownership of a particular resource, the economic interventions within the particular economy, and the aspect of the money supply, labor market, and the interest rates of the particular society (Bellinger, 2015). The overall goal that an economic policy is to achieve includes the creation of creating high welfare levels and continuing to contribute to the growth of the economy. In this light, the economic policies assist individuals to deal with the challenges that emanate from environmental changes, the influx of new technologies, demographic shifts and environmental change. For this reason, when coming up with a particular economic policy, the policymakers’ decisions should not only be effective but also just.
The different points presented above lead to the conclusion that the economic policy of the government focuses on the measures through which it can use to influence the economy. The OECD (2011) states that the national budget could be considered as a reflection of the country’s economic policy. The national budget enables the government to exercise its fundamental methods used for the establishment of control. These principles include the allocative, stabilization, and the distributive functions (Bellinger, 2015). When implementing public economic policies, the government focuses on achieving the predetermined or desired economic objectives. In this case, the government uses the identified functions to facilitate and ensure that they accomplish the tasks that would assist in the realization of the desired end. However, the different functions should revolve around the government’s budget, which means that the policies should benefit the nation optimally.
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Once the responsible entities in the government have made decisions regarding the manner in which the national budget should be shared between different national activities, the public authorities have to decide on the particular projects that should be implemented. The decision to select a specific project could be influenced by a cost-benefit analysis. According to David Weimer (2009), cost-benefit analysis enables the public authorities to select a project to complete based on the ration of the attached benefits of the project to the costs. Only satisfactory ratios are likely to influence the selection of a particular project. In this case, the public sector uses cost-benefit analysis to compare different programs, consequently leading to the selection of a specific program that the officials consider as promising (Weimer, 2009). For this reason, it would be possible to point towards the fact that the government primarily uses cost-benefit analyses as the primary economic tool for assessing as well as evaluating different propositions on resource allocation. This tool enables the government to fulfill its mandate that involves the allocation of public resources.
Cost-benefit analysis is utilized in every public sector investment. The different sectors are inclusive of healthcare expenditures, housing, the nationalization of industries, regional development, and planning issues, among other investments. For instance, through the cost-benefit analysis, it has been possible for the United States to assess the environmental projects developed by the public sector. In this case, the country has used this analytic tool to assess the way to control diseases and assess the reservoir projects (Bellinger, 2015). For this reason, policymakers refer to the varied cost analysis tools to assist in decision-making. For instance, the tool should enable them to determine the entity responsible for paying for a particular project and the people that are likely to benefit from the implementation of such a project.
References
Bellinger, W. K. (2015). The Economic Analysis of Public Policy. Routledge.
Organisation for Economic Co-operation and Development (OECD). (2011). Economic Policy Reforms 2011: Going for Growth . OECD Publishing.
Weimer, D. (2009). Cost-Benefit Analysis and Public Policy . Chichester: Wiley.
