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Government Interaction in the U.S. Economy and Market Stability

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Please explain how government interaction in the U.S. economy can bring about market stability.

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Solution Summary

This solution discusses how government interaction in the American economy can facilitate stronger market stability. References are also listed to promote research.

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This is a broad and controversial topic. I want to give you references that reflect a balanced view of the issues. Here are some from well known and respected organizations.

http://www.heritage.org/research/reports/2009/09/the-economic-role-of-government-focus-on-stability-not-spending
http://news.xinhuanet.com/english/2009-05/23/content_11423707.htm (from India)
http://www.imf.org/external/pubs/ft/issues/issues31/index.htm (from the IMF)
http://www.aei.org/events/print/government-policy-and-financial-market-stability-event (from AEI, very important)

The fact that some of these are from overseas is not a problem. Some of their ideas might help Americans make sense out of their own problems.

As you know, I cannot write the paper for you. I can however, give you a few concepts and outlines that will make your life much easier when you actually put this together yourself.

First of all, you need to define what market stability is. It is very broad. Let's just stress the main ingredient: the creation of confidence and basic certainty in the macro-economy. The broader point is that people do not want to invest or spend if they think that things will get worse. In other words, confidence is the main issue, and is as much a psychological concept as an ...

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