Issues in Macroeconomics
2. Six Macroeconomic Goals of the Promised Land

Most macroeconomists are interested in six major goals:

  1. Low unemployment
  2. Low and stable inflation
  3. Minimal domestic economic fluctuations
  4. Minimal international economic fluctuations
  5. High rates of economic growth, combined with broad-based development
  6. Wise economic policy, which consists of governmental and non-governmental efforts to influence the other five goals.

Wise economic policy, the sixth goal on the list, intends to take the other five goals to the promised land-and keep them there. The macroeconomic promised land is a place where macro variables sit together in optimal equilibrium.

Economists differ in their vision of the promised land; some, such as McCloskey and Milton Friedman, think they've found it when the role of government in the economy is small, inflation is low, and output high. Others, such as Klamer and Ziliak, envision a promised land in which the unemployment rates of all people, regardless of skin color, origin of birth, or any other demographic characteristic is low, while earnings at the bottom of the income distribution are at the same time high enough to overcome the burdens of undignified poverty; in Klamer's and Ziliak's promised land, the poorest members of society have-in a phrase invented by Nobel Laureate Amartya Sen-sufficient income, health, and education to be "free to achieve." Still other economists, such Herman Daly and his colleagues who study "ecological macroeconomics," would like to replace the goal of "economic growth and development" (goal #5) with an environmentally-based notion of "sustainable development." Klamer and Ziliak, to name two more economists, sympathize with the ecological goal.

Economic visions differ. That much is true. But essentially every economist agrees that the macroeconomic promised land has the following characteristics: a low unemployment rate, a low and stable rate of inflation, a high rate of economic growth per capita, broad-based social development (including mass education, nutrition, and universal suffrage), and international cooperation and stability in financial and product markets. Getting to the promised land, and staying in it, with do re mi for everyone and maybe even some free time for a game of chess, is the deepest challenge of macroeconomic policy-making.