MACROECONOMIC POLICY AND GENDER INEQUALITY: WHAT ARE THE CONNECTIONS?

Macroeconomics claims as its domain the policies, prices and practices that affect the economy as a whole. In contrast, microeconomics primarily concerns itself with the choices individuals and businesses make. In many respects, this way of carving up the economy is artificial. Macro–micro overlaps are commonplace. Individual decisions and behaviours, taken together, affect the overall economy. Likewise, a general collapse of financial markets changes the choices people make. There are certain interventions that have broad-based impacts and have the potential to alter the general economic environment. We call these interventions macroeconomic policies.

Macroeconomic policies are typically divided into two categories: fiscal policies and monetary policies. Fiscal policies are concerned with how governments mobilize resources and how they spend the money they have. They include government spending, tax policy, and the generation of other types of public revenues. Governments are also capable of borrowing when expenditures exceed current revenues. Fiscal policies are therefore concerned with deficit financing and the management of the public debt.

Monetary policies are the remit of central banks. They affect the supply of credit and the resources available to financial institutions. They are able to influence some of the most important prices in the economy: interest rates and exchange rates. Interest rates affect the cost of borrowing and impact major economic decisions: whether to buy a house, whether to expand a business, and whether to take out a loan for a new car. Exchange rates have a huge effect on international transactions. They influence a country’s ability to compete on global markets and the cost of imported essentials, such as food and energy.

Governments and central banks implement macroeconomic policies with a number of objectives in mind. In some cases, macroeconomic policies attempt to promote economic growth. They can be used to try to insure that there is adequate demand for the goods and services an economy produces. By changing the level of demand, they have a knock-on effect on the level of employment. Because of this, one common macroeconomic policy objective is to reduce unemployment.