State regulation of the economy is a necessary system of control, legislative and executive measures, the purpose of which is to stabilize the economy and adapt it to changing conditions.
The state performs regulatory functions using various methods and forms of influence on the economy. There are such regulatory methods as economic and administrative.
In developed countries, economic measures prevail, among which tax regulation of the economy stands out. Fiscal policy is the oldest instrument of government intervention in a market economy . Changing 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 is an effective method of coordinating the actions of business entities. It determines the responsibility for high-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 affect decision making in the distribution of labor, the implementation of investment policies, etc.
However, an unpredictable and unregulated market is not able to ensure the achievement of long-term goals and ensure the implementation of priority socio-economic tasks. State regulation of the economy in this regard is a necessary factor in a balanced situation on the market. After all, uncoordinated market relations can lead to unnecessary expenses for the production of unclaimed products, bankruptcies as a result of changes in market conditions and solvency of counterparties.
In fact, the laws of the market determine the prospects for the development of society spontaneously. This is precisely their limited nature. Therefore, state regulation of the economy must be combined with the work of the market mechanism.
The state intervenes in the economy even in the most developed countries. This is a justifiable and necessary measure. It is noteworthy that the higher the level of productive screens, the more significant the division of labor between individual enterprises and industries, the more competition increases, the more popular is the participation in the state economy.
The main ideologist of the theory of economic regulation is 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 the economy consists in the impact of state bodies of federal and regional scale on market elements (supply, demand), quality of goods, sales conditions, competition, market infrastructure , etc.
Today in different countries there are different methods of regulating the economy: price control, taxes, long-term standards, expert assessments, limit limits and others. Each state chooses methods of influence independently, focusing on their effectiveness in specific geographical and historical conditions. They allow you to influence the market and regulate the relationship of sellers and buyers.
Methods are constantly updated and improved under the influence of new tasks of the economy. Flexible use of state intervention in the economy is ensured by combining market principles with planned methods.
Countercyclical regulation of the economy is the direction of state policy in the economic sphere, which is aimed at softening the regular cycles inherent in the development of the economy. Such regulation is based on the use of stabilizers (taxes, benefits, subsidies, etc.).