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Economists and Economic Policy


Economists play a major role in helping governments to devise economic policy. In order to consider this role, it is necessary to distinguish between positive and normative statements.

A positive statement is a statement of fact. It may be right or wrong, but its accuracy can be tested by appealing to the facts:

e.g. ‘Unemployment is rising’.

e.g. ‘Inflation will be over 6% by next year’.

e.g. ‘If the government cuts taxes, imports will rise’.

These are all examples of positive statements. They do not necessarily have to be true, but we can test whether they are true or false by looking at evidence. If we make a prediction, we will have to wait to see what happens.

A normative statement is a statement of value: a statement about what ought or ought not to be, about whether something is good or bad, desirable or undesirable:

e.g. ‘It is right…

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