The dynamic symmetry of economic system as the optimality criterion for a public business cycle policy

Abstract

To determine the optimality criterion for a business cycle policy is important today because of the inefficiency of the public business cycle regulation in the period of the world financial crisis of 2008-2010. The transition to the non-traditional monetary and fiscal policy forms implemented in developed economies reveals the perfection of business cycle policy tools but it doesn’t solve the problem of optimality criterion definition. The maximization of the function value, that linearly describes macro economy, cannot serve as an optimality criterion for the business cycle policy regulation because of the nonlinear nature of the economic system. The recovery of a disturbed balance at a macro level in different cyclical phases cannot be considered as an optimality criterion either, because the economic system is off-balance; its non-equilibrium state is the source of development. In this connection the dynamic symmetry attainment of an economic system can be considered to be an optimality criterion. The dynamic symmetry, unlike the static one, is the ability of the system elements to adapt in the conditions of mutual developments as the result of both internal and external shocks, which influence the system as a whole. At that, the system becomes more sustainable. The dynamic symmetry does not revolve into the consistency of balance conditions, i.e. it is not a mechanical transition from one static symmetry to another, but it means the system transition to a new quality level. The dynamic symmetry being the optimality criterion of the business cycle policy corresponds to the system approach to the analysis of economic phenomena. The business cycle policy has been proved to be specifically aimed to form the conditions for the dynamic symmetry achievement, because the system imbalances are the reasons for the cyclical fluctuations. The algorithm for the formation of an optimal business cycle policy has been summarized for the national economic system.

Keywords

business cycle policy, optimality criterion, macroeconomic balance, socio-economic system, concept of symmetry, static symmetry, dynamic symmetry, cyclic dynamic, “crisis cycle trap”

For citation

Leliuk I.N. The dynamic symmetry of economic system as the optimality criterion for a public business cycle policy. Perm University Herald. Economy, 2017, vol. 12, no. 1, pp. 38–48. DOI 10.17072/1994-9960-2017-1-38-48

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