Government Policies for Economic Growth and Productivity

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Government Policies for Economic Growth and Productivity
Michael Pintar
ECN400 – Managerial Economics
Colorado State University Global Campus
Dr. John Speir
November 11, 2012
Government Policies for Economic Growth and Productivity
Michael Pintar
ECN400 – Managerial Economics
Colorado State University Global Campus
Dr. John Speir
November 11, 2012

Government Policies for Economic Growth and Productivity Government policy for promoting economic growth and productivity has tremendous bearing on our standards of living today and our future. Our policymakers’ ability to exercise proper fundamentals of economic growth determine the livelihood of our next generations (Mankiw, 2012). Whether policies encourage savings and investment, fund R&D, practice free trade, or promote education, the government has many tools and options for controlling our quality of life.
Savings and Investment One method of boosting growth and raising standards of living is by government encouragement of savings and investment in an effort to raise capital. Unfortunately, the economic trade-off to achieve more capital requires reduced present day spending on goods and services in exchange for higher future consumption (Mankiw, 2012). To encourage savings, the government may consider a few principal actions: 1), raising current interest rates, thereby reducing demand for loanable funds and encouraging incentive to save, and / or 2), a tax reform intended for reduction of tax on interest income in conjunction with investment tax credits, providing incentive for greater household savings and investment by firms.
Outward-Oriented Policy Policy created to impact economic growth and productivity can be through the outward-oriented policy of free trade. After all, integrating America into the world economy through international trade in goods and services…...

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