normative economics

Examples of normative economics in the following topics:

• Normative and Positive Economics

  • Positive economics is defined as the "what is" of economics, while normative economics focuses on the "what ought to be".
  • Positive and normative economic thought are two specific branches of economic reasoning.
  • Normative economics is a branch of economics that expresses value or normative judgments about economic fairness.
  • Positive economics does impact normative economics because it ranks economic policies or outcomes based on acceptability (normative economics).
  • Positive economics is defined as the "what is" of economics, while normative economics focuses on the "what ought to be. " Positive economics is utilized as a practical tool for achieving normative objectives.

• Which Methodology is "Correct?"

  • Methodological problems apply to all knowledge including Newtonian mechanics, the theory of relativity and quantum mechanics as well as economics.
  • In economics, the methods used and ideological preconceptions of individual economists and schools of thought help to explain many of the differences in explanations of problems and policies advocated.
  • Modern economic theory has a long tradition of following a "modernist" methodology characterized by a strong faith in empiricism and rationalism.
  • Normative economics (or the study of what "ought to be") is seen as distinctly separate from positive economics.
  • When economics is studied as a process of provisioning, normative and positive issues become interrelated.

• Milton Friedman

  • His article, "The Methodology of Positive Economics" in Essays in Positive Economics [1953] was one of the most important influences on economic thought.
  • In this important piece, Friedman sets the standards for normative and positive economics as well as influencing several generations of economists.
  • He argues that positive economics is "independent of any ethical position" and its task is to provide "a system of generalizations that can be used to make predictions about the consequences of any change in circumstances;" it is deals with "what is" (Friedman, p 4).
  • Normative economics is dependent on positive economics and deals with "what ought to be. "
  • Friedman argues that economics can be a positive science.

• The Standard View of the Scientific Method

  • The first step in the so-called scientific method requires an integration of positive and normative issues (normative and positive aspects of economics was discussed under the section on Milton Friedman).
  • If my shoes hurt my feet (a positive statement) and I think they shouldn't hurt my feet (a normative statement), I recognize a problem.
  • If there is unemployment (positive statement) and believe there should be unemployment (normative statement), a problem is not recognized.

• Introduction to Foreign Trade and Global Economic Policies

  • U.S. foreign trade and global economic policies have changed direction dramatically during the more than two centuries that the United States has been a country.
  • But since the Great Depression of the 1930s and World War II, the country generally has sought to reduce trade barriers and coordinate the world economic system.
  • This commitment to free trade has both economic and political roots; the United States increasingly has come to see open trade as a means not only of advancing its own economic interests but also as a key to building peaceful relations among nations.
  • This reflected both the tendency of Americans to consume more and save less than people in Europe and Japan and the fact that the American economy was growing much faster during this period than Europe or economically troubled Japan.
  • On top of that, the end of the Cold War saw Americans impose a number of trade sanctions against nations that it believed were violating acceptable norms of behavior concerning human rights, terrorism, narcotics trafficking, and the development of weapons of mass destruction.

• Defining Full Employment

  • He preferred that the economy be kept above the full employment level to allow for maximum economic production.
  • In an effort to avoid this normative connotation, James Tobin introduced the term "Non-Accelerating Inflation Rate of Unemployment" also known as the NAIRU.

• How Stock Prices Are Determined

  • When deciding whether to purchase or sell stocks, investors consider the general business climate and outlook, the financial condition and prospects of the individual companies in which they are considering investing, and whether stock prices relative to earnings already are above or below traditional norms.
  • Rising interest rates tend to depress stock prices -- partly because they can foreshadow a general slowdown in economic activity and corporate profits, and partly because they lure investors out of the stock market and into new issues of interest-bearing investments.

• A Summary of International Trade Agreements

  • International trade agreements are agreements across national borders that reduce or eliminate trade barriers to promote economic exchange.
  • International trade agreements are trade agreements across national borders intended to reduce or eliminate trade barriers to promote economic exchange.
  • It is also useful to create standards and norms across different countries, particularly for things like intellectual property law recognition, which enables businesses to operate across borders.
  • Mexico is also a point tension due to the fact that it is developing economically (compared to the U.S. and Canada who are considered already developed).
  • The Asia-Pacific Economic Cooperation (APEC) is a forum of 21 countries in the Pacific Rim region, focusing on free trade and economic cooperation.

• Private Property Rights

  • These relations specify the norms of behavior with respect to goods that each and every person must observe in his daily interactions with other persons, or bear the cost of non-observance.
  • [Eriik Furuboton and Svetozar Pejovich, The Economics of Property Rights, Cambridge, Mass.: Ballenger, 1974, p 3]
  • There is a large literature on the economics of crime not addressed here.
  • In some cases the exchange or use of an economic good may have "third-party" or "spillover" effects.
  • In some cases it is technically impossible to exclude (prevent an individual) individuals from the consumption and benefits of a produced economic good.

• Early Farm Policy

  • Widespread individual ownership of modest-sized farmers was never the norm in the South as it was in the rest of the United States.
  • In a very real sense, agriculture powered America's economic development.