Franklin Raine In practice, fiscal and monetary policies are made incrementally that is, deci sionmakers concentrate their attention on modest changes creases in existing taxing, spending, increases or de and deficit levels as weil as the money supply and interest rates. is especially pervasive in annual federal budget making. Budget makers do not reconsider the of all programs year or even pay much attention to previously established expenditure levels. Rather last year's expenditures are usually considered as a base of spending for each pro- gram, and active consideration of budget proposals focuses on new items and in creases over last year's base. Incrementalism describes the process of economic policymaking, and it also provides very good short-term predictions of government policies Last years ex- penditure level for any program is the best predictor of next years ex- penditure level. Incrementalism is also an atory theo t helps to expiain why government programs, policies, and expenditures persist and grow over time long after value society has diminished But before the amining incrementalism in government policymaking, let us consider some of leading rational theories that compete as guides to economic policy
ECONOMIC THEORIES AS POLICY GUIDES on the econ Macroeconomic theories, when applied to the government's influence and money aggregate amounts of spending, borrowing, gov Macroeconomic th try both to explain economic cycles and to prescribe ernment policies to counter inflation and recession.