Modern Perspectives on Fiscal Stabilization Policies 1 Introduction
... economic activity approaches its social optimum. Thus, according to this second view, business cycles are associated in a fundamental way with variations over time in the efficiency of aggregate resource allocations. In recent work with Mark Gertler and J. David López-Salido (see Galí, Gertler and L ...
... economic activity approaches its social optimum. Thus, according to this second view, business cycles are associated in a fundamental way with variations over time in the efficiency of aggregate resource allocations. In recent work with Mark Gertler and J. David López-Salido (see Galí, Gertler and L ...
15.1 The Evolution of Fiscal Policy
... What is your normal capacity for academic work, and when do you usually exceed that effort? If the economy is already operating at full employment, how can it produce more? Can fiscal policy reduce swings in the business cycle? Why has the federal budget been in deficit most years? How is ...
... What is your normal capacity for academic work, and when do you usually exceed that effort? If the economy is already operating at full employment, how can it produce more? Can fiscal policy reduce swings in the business cycle? Why has the federal budget been in deficit most years? How is ...
Slide 1
... government spending, net exports, and autonomous consumption are positively related to an increase in output. An increase in taxes is negatively related to an increase in output. ...
... government spending, net exports, and autonomous consumption are positively related to an increase in output. An increase in taxes is negatively related to an increase in output. ...
Fiscal policy
... Due to these long lags, critics of active policy argue that such policies may destabilize the economy rather than help it: By the time the policies affect agg demand, the economy’s condition may have changed. These critics contend that policymakers should focus on long-run goals like economic growth ...
... Due to these long lags, critics of active policy argue that such policies may destabilize the economy rather than help it: By the time the policies affect agg demand, the economy’s condition may have changed. These critics contend that policymakers should focus on long-run goals like economic growth ...
FEDERAL INFRASTRUCTURE SPENDING: NEITHER A GOOD
... Finally, other factors contribute to increasing the costs of public infrastructure spending and making it harder to be profitable. For instance, federal “prevailing-wage” requirements (such as the ones imposed by the Davis Bacon Act) require that construction workers employed by private contractors ...
... Finally, other factors contribute to increasing the costs of public infrastructure spending and making it harder to be profitable. For instance, federal “prevailing-wage” requirements (such as the ones imposed by the Davis Bacon Act) require that construction workers employed by private contractors ...
Greece
... Fiscal policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity. Fiscal policy is largely based on the ideas of British economist John Maynard Keynes (1883-1946). Also known as Keynesian econ ...
... Fiscal policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity. Fiscal policy is largely based on the ideas of British economist John Maynard Keynes (1883-1946). Also known as Keynesian econ ...
Chapter 15
... 1. "Activist policies have been followed by the government only after World War II. The business cycles since that time have been much milder than those before the war. Therefore, activist policies have successfully stabilized the economy." How would an economist favoring nonactivism respond to this ...
... 1. "Activist policies have been followed by the government only after World War II. The business cycles since that time have been much milder than those before the war. Therefore, activist policies have successfully stabilized the economy." How would an economist favoring nonactivism respond to this ...
Keynesian Economics
... As noted, the classicals wanted to balance the government budget. To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor. For example, Keynesians see Herbert Hoover's June 1932 tax in ...
... As noted, the classicals wanted to balance the government budget. To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor. For example, Keynesians see Herbert Hoover's June 1932 tax in ...
Working Paper No. 514 The Continuing Legacy of John Maynard
... all agents are equally credit worthy). By contrast, the basic Keynesian model is easily extended to account for heterogeneous credit ratings, to allow default to affect expectations, and to include “contagions” and other repercussions set off by default of one large economic entity on its commitmen ...
... all agents are equally credit worthy). By contrast, the basic Keynesian model is easily extended to account for heterogeneous credit ratings, to allow default to affect expectations, and to include “contagions” and other repercussions set off by default of one large economic entity on its commitmen ...
06 How Macroeconomics Lost Complexity Z1
... Classical cannon of thinking about aggregate fluctuations, and that once integrated these insights would revolutionize Classical thinking. Given this belief, Keynes turned his attention to writing the General Theory, which he saw as a true general theory of the aggregate economy. He wrote to his fri ...
... Classical cannon of thinking about aggregate fluctuations, and that once integrated these insights would revolutionize Classical thinking. Given this belief, Keynes turned his attention to writing the General Theory, which he saw as a true general theory of the aggregate economy. He wrote to his fri ...
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... countries, but also some advanced countries, face additional constraints such as volatile capital flows, high public and foreign indebtedness, and large risk premia. The fact that some countries cannot engage in fiscal stimulus makes it all the more important that others, including some large emergi ...
... countries, but also some advanced countries, face additional constraints such as volatile capital flows, high public and foreign indebtedness, and large risk premia. The fact that some countries cannot engage in fiscal stimulus makes it all the more important that others, including some large emergi ...
this document - Committee for a Responsible Federal
... 1) The package should be designed to accomplish economic, not political, objectives. There is already a good deal of momentum behind the idea that there should be another stimulus package and the size of this package seems to be growing by the week. It is critical that this not become a political pa ...
... 1) The package should be designed to accomplish economic, not political, objectives. There is already a good deal of momentum behind the idea that there should be another stimulus package and the size of this package seems to be growing by the week. It is critical that this not become a political pa ...
Chapter 9 Fiscal Policy
... are built into the system so that an expansionary or contractionary stimulus can be given automatically. • The welfare state and the progressive income tax serve as the built-in policies. – If the economy is in recession, those who lose their jobs are granted unemployment and welfare benefits and th ...
... are built into the system so that an expansionary or contractionary stimulus can be given automatically. • The welfare state and the progressive income tax serve as the built-in policies. – If the economy is in recession, those who lose their jobs are granted unemployment and welfare benefits and th ...
Kiel Policy Brief - Institut für Weltwirtschaft
... that taxpayers are the best judges for spending. In smaller developing economies, however, economists see no effective scope for tax cuts. Arbache (2009) argues for the example of Africa that the income tax base is fairly low. Furthermore, due to the extremely high propensity to import, also a VAT c ...
... that taxpayers are the best judges for spending. In smaller developing economies, however, economists see no effective scope for tax cuts. Arbache (2009) argues for the example of Africa that the income tax base is fairly low. Furthermore, due to the extremely high propensity to import, also a VAT c ...
Keynesian economics
... As noted, the classicals wanted to balance the government budget. To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor. For example, Keynesians see Herbert Hoover's June 1932 tax in ...
... As noted, the classicals wanted to balance the government budget. To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor. For example, Keynesians see Herbert Hoover's June 1932 tax in ...
Europe`s fiscal reaction to the crisis
... Fiscal impulse 2008-10 in euro area and US Change in budget balance due to automatic stabilisers and fiscal stance (% of GDP) ...
... Fiscal impulse 2008-10 in euro area and US Change in budget balance due to automatic stabilisers and fiscal stance (% of GDP) ...
Assessing the Federal Policy Response to the Economic Crisis
... correspondingly reducing withholding. The objective of this part of the package was to jumpstart consumption demand and thereby jump-start the economy. Aggregate disposable personal income did jump at the start of the stimulus; however, aggregate personal consumption expenditures did not increase by ...
... correspondingly reducing withholding. The objective of this part of the package was to jumpstart consumption demand and thereby jump-start the economy. Aggregate disposable personal income did jump at the start of the stimulus; however, aggregate personal consumption expenditures did not increase by ...
Discretionary Fiscal Policy
... from 6.25% in September 2000 to a current level of 1.75%. Expansionary fiscal policy: The federal government budget has shift from a surplus of 236 bn dollars in 2000 to a projected 2002 deficit of 157 bn dollars as Government expenditure increased and Tax rate declined. The active use of fiscal pol ...
... from 6.25% in September 2000 to a current level of 1.75%. Expansionary fiscal policy: The federal government budget has shift from a surplus of 236 bn dollars in 2000 to a projected 2002 deficit of 157 bn dollars as Government expenditure increased and Tax rate declined. The active use of fiscal pol ...
The Confidence Fairy in Historical Perspective
... orthodoxy of the day…. To suggest social action for the public good to the City of London is like discussing the Origin of Species with a bishop sixty years ago. The first reaction is not intellectual, but moral. An orthodoxy is in question, and the more persuasive the arguments the graver the offen ...
... orthodoxy of the day…. To suggest social action for the public good to the City of London is like discussing the Origin of Species with a bishop sixty years ago. The first reaction is not intellectual, but moral. An orthodoxy is in question, and the more persuasive the arguments the graver the offen ...
What We Do and Don`t Know about Discretionary Fiscal Policy
... Know about Discretionary Fiscal Policy ...
... Know about Discretionary Fiscal Policy ...
Fiscal Policy--String Theory
... but monetary policy has been the tool of choice more recently. Fiscal policy tools are now being more actively considered. Fiscal policy has been contracting in the U.S. after the large initial fiscal stimulus in response to the financial crisis in 2008. Both presidential candidates have made fiscal ...
... but monetary policy has been the tool of choice more recently. Fiscal policy tools are now being more actively considered. Fiscal policy has been contracting in the U.S. after the large initial fiscal stimulus in response to the financial crisis in 2008. Both presidential candidates have made fiscal ...
the full paper
... crisis (GFC) and what is often termed the “Great Recession” of 2008/09. These were events I experienced professionally as Chief of Staff to Treasurer Wayne Swan between late 2007 and 2010. ...
... crisis (GFC) and what is often termed the “Great Recession” of 2008/09. These were events I experienced professionally as Chief of Staff to Treasurer Wayne Swan between late 2007 and 2010. ...
Presentation
... in Fiscal Stimulus Packages: Some Facts* 35 countries announced social protection measures in their fiscal stimulus plans; Total allocated to social protection in fiscal stimulus plans is about USD653 billion (about 1% of world GDP in 2008); On average, the 35 countries announced to spend 25% ...
... in Fiscal Stimulus Packages: Some Facts* 35 countries announced social protection measures in their fiscal stimulus plans; Total allocated to social protection in fiscal stimulus plans is about USD653 billion (about 1% of world GDP in 2008); On average, the 35 countries announced to spend 25% ...
WHY THE FISCAL MULTIPLIER IS ROUGHLY ZERO*
... by the slow recovery from the 2008 recession. In the United States, Congress passed a nearly $800 billion stimulus in early 2009—yet growth remained sluggish. More recently, a shift towards fiscal austerity does not seem to have noticeably slowed the rate of economic growth.1 This seems to go agains ...
... by the slow recovery from the 2008 recession. In the United States, Congress passed a nearly $800 billion stimulus in early 2009—yet growth remained sluggish. More recently, a shift towards fiscal austerity does not seem to have noticeably slowed the rate of economic growth.1 This seems to go agains ...
Macro Ideas and Theories - Great Valley School District
... analyzed, primarily due to limited data, inaccuracy of data, and the infrequency of business cycles occurring prior to the mid-1850s.) The End of the Great Depression—This EIA explains how expansionary fiscal policy bought about by spending for World War II ended the depression and provided evidence ...
... analyzed, primarily due to limited data, inaccuracy of data, and the infrequency of business cycles occurring prior to the mid-1850s.) The End of the Great Depression—This EIA explains how expansionary fiscal policy bought about by spending for World War II ended the depression and provided evidence ...
2008–09 Keynesian resurgence
In 2008 and 2009, there was a worldwide resurgence of interest in Keynesian economics among prominent economists and policy makers. This included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great Depression— most especially fiscal stimulus and expansionary monetary policy.From the end of the Great Depression until the early 1970s, Keynesian economics provided the main inspiration for economic policy makers in Western industrialized countries. The influence of Keynes's theories waned in the 1970s, due to stagflation and critiques from Milton Friedman, Robert Lucas, Jr., Friedrich Hayek and other economists who were less optimistic about the ability of interventionist government policy to positively regulate the economy. From the early 1980s to 2008, the normative consensus among economists was that attempts at fiscal stimulus would be ineffective even in a recession, and such policies were only occasionally employed by the governments of advanced nations.In 2008, a rapid shift of opinion took place among many prominent economists in favour of Keynesian stimulus, and, from October onward, policy makers began announcing major stimulus packages, in hopes of heading off the possibility of a global depression. By early 2009 there was widespread acceptance among the world's economic policy makers about the need for fiscal stimulus. Yet by late 2009 the consensus among economists began to break down, and in 2010 with a depression averted but unemployment in many countries still high, policy makers generally decided against further fiscal stimulus. With the end of the brief consensus for Keynesian policies, but with the neoliberal policies that characterised the Washington Consensus era still viewed by many as discredited, several commentators have predicted that the Macroeconomic domain will see a return to ideological struggles.