Theoretical basis for the importance to modify state regulation of open economic systems in globalization

Abstract

The article analyses the influence of globalization on the theory and practice of state regulation of economic systems. The historical background of economic theory suggests that the existing theoretical approaches to the study of state regulation issues originated from the need to solve challenges that are peculiar to a particular stage of economic development. In this regard the practice of state regulation should be based on the entire system of knowledge about the subject and to take into account the specific features of the economic system at a certain stage of its development. The aim of the research is to determine trends in the field of fiscal and monetary regulation of open economic systems. This determination will involve the analysis of the world-wide theory and practice of state regulation. The present research is based on the following methods: a scientific abstraction method, historical and logical approaches. A set of acute challenges has been determined while studying the theory of state regulation. The most important challenge among this list is a discussion between leading economists about the extent, mechanisms and goals of macroeconomic theory influence on the practice of state regulation. The choice between priorities and mechanisms of fiscal and monetary instruments of state regulation has become the next field for discussions. These contradictions are intensified by globalization processes in the monetary and credit system and by restrictions in the fiscal sphere. In turn, the priority of certain instruments of economic policy is determined by the choice of an exchange rate regime. During the study we have revealed that the choice between automatic and discretionary policy of government regulation is much more complicated. It may not be reduced to a simple optimization of the combination of state regulation instruments, as it affects the interaction between a state and a market and determines the boundaries of a state intervention in the economy. During our research we have come to the conclusion that current advances in macroeconomic theory mostly affect the monetary sphere and do not consider the proportion and dynamics of a real sector development. Though, from the author’s view pint, these items should determine the direction and content of the state regulation of economic system of any type. The classification of trends in the field of fiscal and monetary regulation has been provided.  It describes the process of transformation of the channels of monetary transmission and the formation of restrictions in the field of fiscal and customs policy of a state. The trends listed in the article indicate the transformation of the "market-state" tandem that is observed not only at national but also at a supranational level.

Keywords

a state regulation, a fiscal policy, a monetary policy, a discretionary policy, an automatic policy, exchange rate regimes, open economic systems, globalization

For citation

Kamyshova A.B. Theoretical basis for the importance to modify state regulation of open economic systems in globalization. Perm University Herald. Economy, 2017, vol. 12, no. 3, pp. 388–403. DOI 10.17072/1994-9960-2017-3-388-403

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