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Some Definitions and Preliminaries
Some Definitions and Preliminaries

... significant period. There are three sub-categories usually identified: (i) fixed capital formation machinery, computers, factory buildings etc. which help firms produce goods; (ii) residential investment - the construction of new houses; (iii) stockbuilding - goods/raw materials which firms hold as ...
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... (1998). The recommendation he formulated might have seemed provocative, as it included a central bank openly supporting the inflationary processes’ escalation2. Later on it was wildly commented upon within the formal models of Reifschneider and Williams (2000) or Eggerston and Woodford (2003). The e ...
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... enterprises are not easily subject to taxation (except for taxes in the form of other taxes on production) nor to the expansion of social policy. Unincorporated enterprises do pay out wages and salaries but these payments are normally not subject to taxation. Corporations sector Compensation of empl ...
Fiscal Performance and Reelection across Brazilian States
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... and the country faced a long-lasting restructuring of production (see Pohjola, 1996; Heikkinen and Kuusterä, 2001). The paper illustrates how the resulting, large and rapid restructuring affected the economy. The policy change is analyzed as a lifting of investment tax credit. The modeling choice ...
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... The second line of research we relate to is the empirical work which studies whether budget deficits are primarily the result of increases in aggregate expenditure or cuts in aggregate taxation. For instance, Bohn (1992) addresses this issue with specific reference to the United States. While we tou ...
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... measure of Income excludes spending on such basics as food, shelter, clothing, child care, utilities, out of pocket medical care expenses, transportation and interest payments on consumer debt. Source: BEA NIPA data, deflated using PCE less food and energy price index. ** The slightly higher average ...
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RTF 506.9 KB - Productivity Commission

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... accounts are data collected and published by the government describing the various components of national income and output in the economy. • The Department of Commerce is responsible for producing and maintaining the “National Income and Product Accounts” that keep track of GDP. © 2002 Prentice Hal ...
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... changes aggregate supply because it changes firms’ costs. The higher the money prices of other resources, the higher are firms’ costs and the smaller is the quantity that firms are willing to supply at each price level. So an increase in the money prices of other resources decreases aggregate supply ...
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... 15.3 THE EXPENDITURE MULTIPLIER The marginal tax rate determines the extent to which income tax payments change when real GDP changes. The marginal tax rate is the fraction of a change in real GDP that is paid in income taxes—the change in tax payments divided by the change in real GDP. The larger t ...
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... rain, created a shortage of essential food items in domestic markets. Apparent failure to raise foreign exchange at concessional rates in international money markets which affected the import of food and other essential goods, the government compelled to opt for more inward looking a closed economic ...
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... Which of the following equations describes the calculation of the natural unemployment rate? a. Natural unemployment = frictional unemployment + structural unemployment b. Natural unemployment = cyclical unemployment + structural unemployment c. Natural unemployment = frictional unemployment + cycl ...
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... be too simplistic, but might lead them to come to predictions significantly different from reality. Some of the first authors to study the determinants of government policy include Roubini, Sachs, Honkapohia, and Cohen (1989). They studied the fiscal policies of OECD countries in from 1960 - 1979, ...
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... two decades, to total public sector deficits. To put these figures in perspective, we also show their size relative to gross domestic product. Table IC3.1 reflects a general trend for deficits to increase both in dollar value and as a proportion of GDP from the 1970s into the late 1990s. Governments ...
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... absorptive capacity, leading to the risk of Dutch disease. Policies to increase absorptive capacity include reducing barriers to competition, avoiding price distortions, and mitigating risks to private investment. Several countries have tried to use fiscal rules to prevent overspending, but with mix ...
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managing aggregate demand: monetary policy

... Greenspan is a taciturn and not very charismatic economist. But when he speaks, people in financial markets around the world dote on his remarks with an intensity that was once reserved for utterances from behind the Kremlin walls. Why? Because, in the view of many economists, the Federal Reserve’s ...
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Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective

... average of the funds rate expected well into the future. The remaining term, wt, denotes the premium paid to investors to compensate for uncertainty in the future course of short-term interest rates and for the chance of default. Given this arbitrage relationship—which is assumed to hold at all time ...
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Fiscal multiplier

In economics, the fiscal multiplier (not to be confused with monetary multiplier) is the ratio of a change in national income to the change in government spending that causes it. More generally, the exogenous spending multiplier is the ratio of a change in national income to any autonomous change in spending (private investment spending, consumer spending, government spending, or spending by foreigners on the country's exports) that causes it. When this multiplier exceeds one, the enhanced effect on national income is called the multiplier effect. The mechanism that can give rise to a multiplier effect is that an initial incremental amount of spending can lead to increased consumption spending, increasing income further and hence further increasing consumption, etc., resulting in an overall increase in national income greater than the initial incremental amount of spending. In other words, an initial change in aggregate demand may cause a change in aggregate output (and hence the aggregate income that it generates) that is a multiple of the initial change.The existence of a multiplier effect was initially proposed by Keynes student Richard Kahn in 1930 and published in 1931. Some other schools of economic thought reject or downplay the importance of multiplier effects, particularly in terms of the long run. The multiplier effect has been used as an argument for the efficacy of government spending or taxation relief to stimulate aggregate demand.In certain cases multiplier values less than one have been empirically measured (an example is sports stadiums), suggesting that certain types of government spending crowd out private investment or consumer spending that would have otherwise taken place. This crowding out can occur because the initial increase in spending may cause an increase in interest rates or in the price level. In 2009, The Economist magazine noted ""economists are in fact deeply divided about how well, or indeed whether, such stimulus works"", partly because of a lack of empirical data from non-military based stimulus. New evidence came from the American Recovery and Reinvestment Act of 2009, whose benefits were projected based on fiscal multipliers and which was in fact followed - from 2010 to 2012 - by a slowing of job loss and private sector job growth.
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