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The US Economy: Explaining Stagnation and Why It Will Persist1
The US Economy: Explaining Stagnation and Why It Will Persist1

... finance to fill the demand gap by lending to consumers and by spurring asset price inflation. Financialization assisted with this process by changing credit market practices and introducing new credit instruments that made credit more easily and widely available to corporations and households. U.S. ...
Romer, Christina D., (2008), Business Cycles, The concise
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... period and resulted in an overall budget deficit of DM 85 billion in 1991. Three main factors affected the budget: reduced revenues as a result of the final stage of the income tax reform that came into effect in 1990, net fiscal transfers attributable to unification, and increased revenues related ...
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... pressure. In general, the period is one of low consumption, low investment and also low imports which will be affected by the fall in both consumption and investment. Lower government tax revenues coupled with high transfer payments (unemployment and social benefits for example) often lead to budget ...
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... many ways emulate the United States of America. In his vision, Europe was to become, in the long term, a sustainable and strong federation that would have a common fiscal policy, along with the common currency with a super central bank that would in many ways resemble the Federal Reserve. Monetary u ...
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OCR AS Economics Unit F582

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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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