2. Amaliy mashg‘ulotlari 1- jadval № Amaliy mashg‘ulotlar mavzulari

Transition and the Changing Role of Government 
Over the past decade many centrally planked economies have set out to 
transform themselves into market economies. To be successful, They need to 
develop the necessary institutions and ensure a proper role for government. 
While much has been written about the economic changes that must take place 
for centrally planned countries to become market economies, less has been 
written about how the economic role of the state must change. In “shock 
therapy”, advocated by some economists at the start of the transition, the main 
ingredients for success were assumed to be price liberalization, macroeconomic 
stabilization, and privatization. Little was said about the role of the government 
in the new environment. A complete transformation of the economy, the 
institutions and economic process requires, in addition, that profitability be the 
guiding criterion for most investment decisions; activities deemed socially 

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desirable be financed by the government and the government effectively 
perform its core functions in the economy while withdrawing from, or 
drastically reducing its role in, many secondary activities.
Budgets and Fiscal Policy 
Budgets are systems used by governments and organizations to indicate 
planned expenditures and revenues for a given year. Budgets are in surplus or 
deficit depending on whether the government has revenues greater or less than 
its expenditures. Fiscal policy refers to taxation and expenditure policies. In this 
connection, the modern economy is blessed with important “built-in 
stabilizers”. Requiring no discretionary action, tax receipts change 
automatically when income 
changes, reducing the multiplier and offsetting part of any disturbance. The 
same stabilizing effect is produced by unemployment compensation and other 
welfare transfers that grow automatically as income falls. Automatic stabilizers 
never fully offset the instabilities of an economy. They reduce the multiplier, 
but do not make it zero. Scope is left for discretionar programs. Discretionary 
policies include public works, jobs programs, and various tax programs. Public 
works involve such long time lags in getting under way as to make their use for 
combating short recessions impractical. Discretionary variations in tax rates 
offer greater short-run flexibility but suffer from severe political complications 
in the United Stales. Most macroeconomists believe that monetary policy is 
more useful than fiscal policy for combating the short-term fluctuations of the 
business cycle. When people began to drop the notion that the government’s 
budget had to be balanced in everу year or month, they first thought it would be 
balance over the business cycle – with boom-time surpluses matching 
depression deficits. Today, we realize that only by coincidence would the 
surplus in prosperous years just balance deficits in recession year. To get a 
better measure of changes in discretionary fiscal policy, economists 

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supplement knowledge of the budget by separating the actual budget into its 
structural and cyclical components. The structural budget calculates how much 
the government would collect and spend if the economy were operating at 
potential output. The cyclical budget accounts for the impact of the business 
cycle on tax revenues, expenditures, and the deficit. To assess the impact of 
usual policy on the economy, we should pay close attention to the structural 
deficit: changes in the cyclical deficit are a result of changes in the economy 
rather than a cause of changes in the economy. 
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