Answer to Question #289566 in Macroeconomics for REE

Question

Explain the difference between heterodox and orthodox stabilization programs.

Answer 1

Orthodox economics has presumptions based on which models are developed. Heterodox economics is based on reality, and the models it uses reflect it.

Heterodox stabilization programs support policies, such as tight fiscal policies and a fixed exchange rate, with the initial, temporary use of income policies, such as price and wage controls. In contrast, orthodox stabilization programs do not support price controls but play a significant role in heterodox approaches.