In the upside down economic world of 1982, both Democrats and Republicans are trying now in the midst of a recession to reduce the federal deficit. They say that in the long run this will help the economy recover.

In the short run, however, economists say that it is likely to have the opposite effect. Most economists say that the immediate effect of a smaller deficit, taken alone, will be an even more depressed economy and a higher unemployment rate.

During previous recessions, most members of both political parties rushed to propose not deficit reduction but spending programs and tax cuts that were supposed to stimulate the economy.

Now Sen. Ernest F. Hollings (D-S.C.) is urging that Congress adopt $115 billion in tax increases and spending cuts that would chop the 1983 deficit to less than half the $91.5 billion proposed by President Reagan.

Sen. Pete V. Domenici (R-N.M.), chairman of the Senate Budget Committee, also has offered an alternative to the president's budget which is not as dramatic as Hollings', but would also move toward retrenchment.

"If we follow the path I have outlined, we can effect a dramatic turnaround in the economy," Hollings promised when he presented his plan. "Deficits will be eliminated, interest rates will go down and everyone can go back to work."

But perhaps not everyone. Miffed at the Hollings initiative, which Treasury Secretary Donald T. Regan called "ridiculous," the administration asked Data Resources Inc. to crank it through its computer model of the economy.

The computer run showed that, while budget deficits and government borrowing would be much reduced, interest rates would not be all that much lower and unemployment, in 1985, would be a whopping 10.8 percent. At the same time, inflation would be less than a percentage point lower than in DRI's basic forecast.

While different analysts might quarrel with DRI's specific numbers, few would challenge the direction of the results: if other policies are unchanged, a reduction in the budget deficit will reduce the level of economic activity generally.

Raising taxes by $1 billion, or reducing government spending by $1 billion, means there is $1 billion less in private hands to be spent or, in some part, saved and invested. Unless private spending goes up by the same $1 billion, fully offsetting the change in the federal budget, the total demand for goods and services in the economy will fall.

The explicit assumption by Hollings seems to be that a reduced budget deficit will lead to lower interest rates, which in turn will stimulate private sector spending, particularly for houses and business investment.

But no well-known model of the economy, either Keynesian or monetarist, would show so great a fall in interest rates that private spending would go up by nearly as much as the budget deficit goes down.

Thus, predictably, the DRI computer model indicates that the Hollings proposal would mean essentially no recovery from the recession, or worse, for the next four years, assuming that monetary policy is left unchanged.

"What people ought to be talking about is the need for a combined operation, a substantial reduction of the deficit and a somewhat easier monetary policy," said Charles L. Schultze, who was President Carter's chief economic adviser.

The payoff from such a shift in the mix of policies would not necessarily be faster economic growth and a more rapid reduction in unemployment, but rather more investment by business and in housing and less consumption by individuals, Schultze said.

The Reagan administration has argued that the deficits it projects for 1983, 1984 and 1985, which add up to more than $246 billion, will not hurt business investment and that the depressed housing industry will lead this year's recovery.

A big increase in saving will allow financing of the deficits, more private sector investment and declining interest rates all at the same time, the administration says.

But many private economists--Republican and Democratic, conservative and liberal--have questioned whether such a rosy outcome is likely. In particular, these doubters say there will be a clash between the administration's stimulative fiscal policy and the Federal Reserve's restrictive money policy.

This clash, many think, will generate another bout of sky-high interest rates and abort any recovery from the current recession within six months or so.

For instance, this week, Donald Maude, chief financial economist for Merrill Lynch, told a New York business conference that the "battle lines between an expansionary fiscal and a highly restrictive monetary policy" have been drawn. The recovery later this year will be "sub-par," he said.

This is the context in which Hollings, Domenici and other members of Congress have been trying to revise the Reagan budget. For political and economic reasons, they want a smaller deficit, along with a somewhat different pattern for federal spending, including smaller increases for defense.

But almost all of the attention has been focused on the size of the deficit and its link to interest rates rather than on the equally important role of monetary policy.

To sort all this out, economist Rudy Penner of the American Enterprise Institute suggests that, to start, policy makers should decide what rate of growth of nominal gross national product--that is, the rate of increase in real output plus inflation--they want.

The Reagan administration projects annual increases in nominal GNP averaging about 10 percent a year for the next five years, a pace that Penner and several of his AEI colleagues regard as inflationary. Federal Reserve policy is aimed at producing an 8 1/2 percent to 9 percent rise in nominal GNP this year, and declining year by year after that.

So far none of the proposals coming from Capitol Hill has addressed these basic questions. What rate of economic growth do Hollings, Domenici and other alternative-budget authors have in mind? How much of an easing of monetary policy, if any, is needed to offset the restraining effects of reducing prospective federal budget deficits? They have not said.