Financial policy in ensuring macroeconomic balance

Abstract

In this research, the role of financial policy in ensuring macroeconomic balance will be examined, taking a comparatiev case of United States and Azerbaijan. Macroeconomic equilibrium is one of the most important and complex categories within the modern economic mainstream. Different approaches and concepts regarding this category have been developed from the perspectives of various economic schools. In economic theory, macroeconomic balance, in its broadest sense, is characterized as the state in which economic processes in the national economy are harmonized and equalized, encompassing aggregate demand and aggregate supply, accumulation and investment, production and consumption, and the real and financial sectors, while ensuring equality in development rates. Equilibrium at the macroeconomic level represents a distinct concept compared to equilibrium in microeconomic theory, which primarily focuses on individual markets. Macroeconomic equilibrium emerges from the interaction and influence of all markets collectively, rather than the behavior of individual markets. In this state of balance, adverse effects caused by fluctuations or changes in supply and demand within one market are not confined to that specific market or its participants but instead impact the equilibrium conditions and elements across all remaining markets. In the broadest sense, economic equilibrium reflects the persistent issue of mismatches between economic resources and demands. Considering economic realities, where demands consistently exceed available resources, complete compatibility cannot be fully achieved, even within the framework of economic equilibrium. Therefore, equilibrium is only possible through limiting demands in some manner and ensuring the efficient utilization of available resources.