The Role of Government

Abstract

The role of government in the United States economy has two major aspects: (1) quantitative — taxes collected, borrowing, government expenditure, purchases, sales and so on, and (2) qualitative — the laws and regulations which affect economic behaviour. There is even a subtle psychological aspect of trust, respect, hope for the future and so on, which government can create or destroy as the case may be. The impact of regulation and deregulation is something that cannot be estimated from simple statistics. The transition from one president to the next (Figure 3.4) seems to make surprisingly little difference to the quantitative aspects of the economy, with perhaps two exceptions: the transition from Hoover to Roosevelt in 1933, which marked the beginning of the ‘New Deal’ and an increase in gross private domestic investment, which brought the United States part of the way out of the Great Depression; and the transition from Carter to Reagan in 1980, which seems to have stimulated a steady rise in personal consumption expenditure as a proportion of the economy.KeywordsInterest RateFederal ReserveGovernment ExpenditureGreat DepressionTotal OutlayThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.