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MICROECONOMIC PRINCIPLES
MICROECONOMIC PRINCIPLES

PDF Full Publication in PDF Format
PDF Full Publication in PDF Format

... bubble period, with income taxes in particular cut to low levels while stamp duties and capital gains taxes sustained the public purse. There is a great deal of truth in this diagnosis. However, international comparisons based on GDP give rise to an exaggerated picture. Taxes on corporate profits te ...
Post-crises Macroeconomic Trends
Post-crises Macroeconomic Trends

... We believe the outturn can be significantly higher than IIF’s expectations. of the emerging and developing countries in general. Moreover, developing countries that are resource rich or large exporters such as Saudi Arabia and China will become major investors globally. ...
lecture notes
lecture notes

... 2. Tax rates above or below this maximum rate will cause a decrease in tax revenue. 3. Laffer argued that tax rates were above the optimal level and by lowering tax rates government could increase the tax revenue collected. 4. The lower tax rates would trigger an expansion of real output and income ...
Pressing the reset button
Pressing the reset button

The Domestic Environment - Hong Kong Monetary Authority
The Domestic Environment - Hong Kong Monetary Authority

... investment expenditure recorded modest growth on a year-on-year basis, consumer spending has weakened considerably and the fall in exports accelerated. However, as imports dropped more rapidly, there was a significant improvement in the merchandise trade balance. While the economic contraction appea ...
The Optimal Composition of Public Spending in a Deep Recession
The Optimal Composition of Public Spending in a Deep Recession

... studies. When we exclude public investment from the set of policy instruments that are available to the policymaker, the optimal plan is such that the cumulative increase in public spending is virtually zero. Second, the optimal plan features a change in the composition of public spending in a way t ...
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Nature and Scope of Public Finance

Chapter 4 -- The IS/LM Model
Chapter 4 -- The IS/LM Model

... intersect (equilibrium interest rate, i*, as well). Keynesian property of model  Y* < YN, (sluggish economy) Y* > YN, (accelerating inflation) Y* = YN (desired state) ...
Is There a Role for Discretionary Fiscal Policy?
Is There a Role for Discretionary Fiscal Policy?

... Finally, as has long been noted, changes in particular components of the surplus—most obviously, changes in spending as opposed to changes in revenues—should have different effects on aggregate demand. Thus, the change in the deficit, even cyclically adjusted, is inadequate to convey the magnitude ...
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... borrow to buy new houses. • depends negatively on r , the “price” of loanable funds (the cost of borrowing). ...
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Who pays for the EU and how much does it cost the UK?

... The 2014 €2 billion euro demand on the UK An illustration of how the dry statistical methodology behind the GNI contribution can erupt into a political dispute arose in 2014 when the UK was confronted with a demand to pay an extra €2 billion euros into the EU budget. The explanation was obscure, but ...
Module The Modern Macroeconomic Consensus
Module The Modern Macroeconomic Consensus

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Answers to PS 3

... nation fixes its exchange rate to a country with which it has a highly coordinated business cycle, this may not be a large cost. If however, the country is hit by frequent idiosyncratic shocks, the loss of monetary policy as a tool to deal with these shocks may exceed any gain from exchange rate sta ...
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Private Debt Overhang and the Government Spending Multiplier

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Fiscal Policy Works When It Is Tried

... ‘‘locomotive’’ to little-lasting domestic benefit, and the worldwide praise for government austerity in the 1990s, have predisposed many observers to dismissing deficit spending as ineffective, if not wasteful. Could there really have been this much stimulus effort having so little effect? The reali ...
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...  Influenced FDR’s New Deal policies  Increase spending in bad economic times  Raise total demand for goods and services ...
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... leftward and move the economy further away from potential real GDP. b. Correct. An increase in federal government spending (G) shifts the aggregate demand curve (AD) rightward toward potential real GDP. c. Incorrect. Keynesian theory argues that the economy will not self correct without government i ...
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American Nations - Arlington Public Schools
American Nations - Arlington Public Schools

... Probably not, its system is just different. There are many competing interests. Unions, Interest Groups like Unions and the NRA, Lobbyists, and PACs all vie with CASH and influence to influence the elections and electorate in local, state and federal offices.  Those without money and who don’t vote ...
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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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