Law and Economic Policy - In-Class Lecture Notes

Law and Economic Policy - In-Class Lecture Notes Intro to Lesson - Law and economic policy are related fields which to a large extent collaborated to create a society and economy. - Knowledge of the relationship between these two disciplines is crucial to comprehend one’s impact on the other with regard to the legal regulation of economic actions and processes. Economic Policy: Economic policy deals with systematic strategies implemented within a country to modify the economic situation. Such measures are done through the laws, administrative regulations and governmental measures affecting economic activities. ● Economic policy is concerned with the promotion of the following goals; growth, employment, stability of prices and income distribution. ● Major components of economic policy are ficient policy, monetary policy and trade policy. - Fiscal policy is the governmental’s; spending and taxation policy tool used to control the economic activities within an economy. ● The government specific monetary policy is implemented through a central bank which deals with matters concerning money stock and interest rates. ● Trade policy consists of tariffs, trade, and trade relations covering the most crucial rules in the international market. Legal Framework: Legal system of a country therefore refers to rules of law by which a particular society is run with due reference to best practices of laws, regulations, and other legal bodies. ● Here are the guidelines that individuals, companies, and other entities in the society have to adhere to. ● An effective legal system provides protection of property rights, implementation of contracts and ways of their violation’s settlement. Interplay Between Law and Economic Policy: Law and economics interact in many ways; the two can therefore not be looked at in isolation from the other. 1. In this respect, legal systems and instruments act as the very pillars for the formulation of economy philosophies. - That is, legal rights in relation to property or contract relations for market and economic transactions are necessary. ● Predictably, people would not invest and carry out other economic activities if property rights are not well defined and protected. ● social rules in the form of laws and regulations affect the economy by steering the behavior of various players in the economy. For instance, labor laws influence employment relations, environmental laws influence the manufacturing and disposal, and antitrust laws influence competition in the market. Economic Analysis of Law: The Economic Analysis of Law is the branch of law that focuses on how economic theories are adopted to guide the impression of the impact of laws as well as legal institutions on actions as well as consequences. ** This approach which is also called law and economics concerns itself with how certain legal rules affect efficiency and allocation of resources in the economy as well as welfare. - Legal academics in this field seek to determine the pros and cons of sets of rights for influencing the actions of an economy. For example, they may learn about how tort law affects safety insuredness, how property law regulates distribution of resources or how contract law affects the course of the business. Policy Implications: The interaction between law and economic policy is a policy concern. ● The existence of legal structures also means that the makers of policies have to take into account the legal factors when he or she is formulating economic policies. For instance, these policies need to be coherent with the already existing legal systems to encourage compliance. In the same way, there must be the achievement of objectives in the economic realm while conforming to legal requirements in the formulation of the regulatory policies.