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The 21st-Century Case for a Managed Economy: The role of disequilibrium, feedback loops and scientific method in post-crash economics by Sean Harkin

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7. The Limitations of Counter-Cyclical Policy

No tool or methodology is perfect. This fact is widely understood in most walks of life but it seems to be easily forgotten when it comes to economic policy, where the issues are often intangible and where the tendency for ideological excess is common. It is therefore essential that we review the major limitations that affect the counter-cyclical policies advocated in the preceding chapter. And, as with the policies themselves and the underlying issues they address, these limitations can often best be understood in terms of the concept of feedback and the complications it can entail.

Delayed Effects

The single greatest weakness of both monetary policy and of discretionary fiscal policy is that ...

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