This chapter begins with the idea that at the most general level, the goal of economic policy is to maximize long-term societal well-being in an equitable and sustainable manner. It addresses in detail the meaning and relevance of the goals of economic policy that are often put forward — from enhancing economic security and reducing unemployment, to reducing inflation, enhancing growth, and maintaining external balance. It also examines the link between stability and growth, and between short-term growth and sustainable growth. More specifically, the chapter critiques the narrow focus of the Washington consensus on price stability and emphasizes that economists should, instead, focus on long-term sustainable growth. The chapter concludes by highlighting the broader social consequences that choosing alternative economic policies may have and by emphasizing that all economic policies have trade-offs.
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