State Regulation of Economy

State regulation of the economy isthe necessary system of control, legislative and executive measures aimed at stabilizing the economy and adapting it to changing conditions.

The state performs regulatory functions through various methods and forms of influence on the economy. There are such methods of regulation as economic and administrative.

In developed countries, economic measures predominateinfluence, among which the taxation of the economy is particularly emphasized. Fiscal policy is the oldest tool of state intervention in the market economy. The change in the level of taxation can regulate the most important positions of the economy, such as aggregate demand, inflation, economic growth, etc.

The market as a management mechanism iseffective method of coordinating the actions of economic entities. It determines the responsibility for quality economic decisions and the final results of economic activity. Prices in market conditions are formed under the influence of supply and demand factors. They influence decision-making in the distribution of labor, investment policy, etc.

Nevertheless, unpredictable and unregulatedthe market is not able to ensure the achievement of long-term goals and ensure the implementation of priority socio-economic objectives. State regulation of the economy in this regard is an indispensable factor in the balanced situation in the market. After all, non-coordinated market relations can lead to unnecessary spending on the release of unclaimed products, bankruptcies as a result of changes in market conditions and the ability of counterparties to pay.

In fact, the laws of the market determine the prospectsdevelopment of society spontaneously. This is precisely their limitation. Therefore, state regulation of the economy must be combined with the work of the market mechanism.

The state intervenes in the economy, even in themost developed countries. This is a justified and necessary measure. It is noteworthy that the higher the level of productive sieves, the greater the division of labor between individual enterprises and industries, the more competition grows, the more popular becomes participation in the economy of the state.

The main ideologist of the theory of regulation of the economyis J. Keynes. According to the theory of the English economist, the state is obliged to intervene in the economy, since the free market does not have mechanisms that could ensure the stability of the economic system.

State regulation of economyis the impact of federal and regional government bodies on market elements (supply, demand), quality of goods, terms of sale, competition, market infrastructure, etc.

Today in different countries there are different methodsregulation of the economy: control over prices, taxes, long-term standards, expert estimates, limit limits, and others. Each state chooses methods of influence independently, being guided by their efficiency in specific geographical and historical conditions. They allow you to influence the market and regulate the relationship between sellers and buyers.

Methods are constantly updated and improvedunder the influence of new tasks of the economy. Flexible use of government intervention in the economy is provided through a combination of market principles and planned methods.

Anti-cyclical regulation of the economy -the direction of state policy in the economic sphere, which aims at mitigating the regular cycles inherent in the development of the economy. Such regulation is based on the use of stabilizers (taxes, allowances, subsidies, etc.).