Questions tagged [fiscal-policy]

the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.

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34
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3answers
2k views

Is a universal basic income possible in the United States?

Is a universal basic income or unconditional demogrant possible in the United States? (For the sake of specificity I have focused the question on the US, though the question is certainly interesting ...
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6answers
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What benefits do governments receive from not eliminating debt?

Most major economies have substantial government debt; for example among the OECD countries the lowest debt rate is Estonia with around 6% of GDP. Now we may be in a global recession at the moment, ...
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4answers
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How does a national budget differ from a household budget?

We are often told by pundits that "Country X cannot spend more than they take in in revenue, because a house that makes A and spends B will always collapse if B>A". Essentially the siren calls of a ...
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100 views

Are the figures quoted in this liblabcon's blog post accurate? (topic: UK banks)

Background With regards to the UK government. I have recently been involved in a debate stemming from figures mentioned in this blog post (the blogger was advocated by Occupy London's facebook page ...
7
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2answers
379 views

What's quantitative easing?

From what I understand after reading mainstream media, quantitative easing increases the supply of money in the economy without direct government spending (fiscal policy). It seems to have all the ...
7
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3answers
98 views

Why are nations engaging in austerity when bond yields are historically low?

In the UK and EU austerity programmes are rife. However, bond yields are also historically low, and have even been negative! At a time when debt is cheaper than ever, and below the accepted long term ...
7
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1answer
82 views

How come the CBO reported the Federal Deficit for FY2014 was \$483 Billion when debt went up by \$1.1 trillion?

The Monthly Budget Review: Summary for Fiscal Year 2014 states that the deficit was \$483 billion. Treasury Direct shows Total Public Debt Outstanding increasing over the same period from \$16.7 ...
6
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1answer
657 views

Australian Dollar Devaluation

I am a layman in economics. I am curious about the current devaluation of Australian Dollar in comparison with the US Dollar. Could someone please explain, in simplest words possible: What causes ...
5
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1answer
70 views

How to get details on all the models used for evaluating ACA?

I am trying to track down the models and the underpinnings/details for them for models that may have been used to evaluate the ACA/Obamacare. I am aware of Gruber's (proprietary) model, and am ...
4
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1answer
101 views

Are there economic policies that help countries fight corruption?

Are there particular taxes or subsidies or public goods that a country's economic authority could implement to help in the fight against corruption? While the rule of law seems to be the first order ...
4
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1answer
105 views

Why doesn't the ECB implement the same fiscal and monetary policy that the FED used to save the US economy?

If the Fed managed to save the US economy with their liberal expansionary policy, why doesn't the ECB follow suit if it is much more efficient in reducing unemployment etc? Also, why did ...
4
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3answers
3k views

What kind of policy is minimum wage?

Does it fall under fiscal, monetary, or supply-side, or perhaps some other group? Also (seeing as minimum wage is a form of price control policy), where does the broader "price control policy" fall?
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1answer
158 views

What do economist state as evidence that “structural reform” works?

The typical recipe for countries to improve their growth rate and escape high indebtedness is to reduce expenditure and implement structural reform. What do people use as evidence of structural reform ...
3
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1answer
441 views

How much influence does the president really have on US economy?

We hear a lot about how the economy changed under a certain president, but how much does the incumbent actually affect the economy? Are the fluctuations we see in economic growth due to natural market ...
3
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1answer
67 views

Economic effects of a Commons Capital Depository

Yanis Varoufakis (Ιωάννης Βαρουφάκης) proposes to fund a universal basic income (UBI) using dividends from a commons capital depository, essentially channeling a percentage of shares issued at an ...
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2answers
3k views

Macroeconomics: Aggregate Demand, Equilibrium Dynamics and Expenditure Multipliers

I am having a hard time with the following economic questions (See attached). Here is my approach: Note about the curves: The graph below depicts an economy where a decline in aggregate demand has ...
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2answers
655 views

In Indonesia, reducing fuel subsidy strongly impacts the price of everyday goods. Why?

In Indonesia, petrol/gasoline price is regulated by the government and historically it is heavily subsidized. I know, economists typically consider fuel subsidy to be a bad policy, for many reasons, ...
2
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1answer
46 views

How does a govt surplus increases investment?

From the closed economy equilibrium condition $I = S + (T - G)$, how does exactly a surplus (which I assume would be used for paying debt) increases investment in the same amount? I ask that because ...
2
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1answer
44 views

How could monetary policy be affected if cash “gifts” to consumers were more frequently used?

A few years ago in the US, everyone who filed taxes received a check for $1000. If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
2
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1answer
1k views

Expansionary fiscal policy in a low mobility economy

I am reading the CFA Level 2 Economics section and I came across this statement: In emerging markets, capital flows may be restricted. In that case, impact of trade balance on exchange rate (goods ...
2
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1answer
257 views

What impact did major fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?

What impact did fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance? Bush passed the Economic Stimulus Act of 2008 and also the Emergency Economic ...
2
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1answer
40 views

Could food storage prevent a depression?

In Genesis chapter 41 Joseph interpreted the dreams of Pharaoh about 7 years of plenty and 7 years of famine which resulted in saving Egypt from famine, among other things. I think this is a great ...
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0answers
327 views

Supply-side economics: reduction in tax

In a nutshell Supply-side economists support reductions in tax, because government revenue can increase (according to the Laffer curve) and businesses and consumers will be incentivised to invest (...
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0answers
260 views

What major fiscal policy actions were taken during the Great Recession (2007-09)?

What major fiscal policy actions were taken during the Great Recession (2007-2009)?
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0answers
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Impact of Fiscal and Monetary Policy during Great Recession on U.S. Economic Performance

What major fiscal and monetary policy actions were taken during the Great Recession (2007-2009)? What impact did they have on U.S. economic performance? I understand how how the recession occurred in ...
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1answer
3k views

Federal Reserve vs National Bank [closed]

The US had a national bank during the first few decades after its birth before it was abolished. Today, we have the Federal Reserve. What are the differences between the Federal Reserve and a ...
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2answers
2k views

What is fiscal impulse?

I came across this term in the following paragraph and I could not comprehend what it meant. The new WPI series does not include any indirect taxes, which brings it conceptually closer to the ...
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1answer
31 views

Does higher tax on luxury goods does more harm than benefit?

I was studying Fiscal policy and I came across measures to reduce income inequality by using fiscal tools. One of the tool mentioned in that was - Higher taxes on luxury goods This makes sense that ...
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1answer
38 views

Advice for finding literature for thesis

I have to write my bachelor thesis in the coming months and I was planning on replicating one of the leading papers of the last years in the field of macro economics. Problem is that I am ...
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1answer
385 views

Flat AD curve - policy effects

Suppose the AD curve is relatively flat because the Fed wants a stable price level. Which policy (monetary or fiscal) is ineffective?
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2answers
428 views

Macroeconomics - Fiscal/Monetary Policy and the Price level

I was studying for my macroeconomics test by solving test banks and I came upon this question which has been really bugging me. To decrease the price level A.the Fed could buy bonds and the ...
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0answers
9 views

Do changes in fixed taxes have a bigger effect on real GDP compared with government spending because they affect consumption

True or False: Changes in fixed taxes have a bigger effect on real GDP compared with government spending because they affect consumption
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63 views

Could the inflation following the Gold Rush have been avoided, are we any “wiser” on inflation now?

Quoting Milton Friedman on the inflationary period shortly following the American Gold Rush in California: "Because there was more gold, they had to pay a little more gold to buy goods and ...
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2answers
349 views

What is the effect of expansionary fiscal policy in case liquidity trap situation?

I've read that liquidity trap means interest rate is at its minimum and increase in real money stock will not lead to fall in interest rate because people will be demanding whatever the amount is ...
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137 views

How does Limited Friction affect a two-period model? Does the Ricardian Equivalence hold?

Consider a two period model with limited commitment involved. Each consumer has a component of wealth which has value $pH$ in the future period, cannot be sold in the current period, and can be ...
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1answer
685 views

Why is there a structural deficit/surplus?

I'm going through Fiscal Policy and I'm reading about Structural Budget and Cyclical Budget. To my understanding, Cyclical Budget is what occurs when automatic fiscal policy is in use. So G and T are ...
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0answers
14 views

Is there a term for economic policy design built from minimizing per-household adverse impact?

May be easiest to start with an example: let's say I'm looking to eliminate the mortgage interest deduction, but want to minimize the impact on households from doing so. I also want the change to be ...
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0answers
48 views

Negative interest rates - Fiscal Policy (Demand-side)

(This is part two of a series of questions I've posted here under "Negative interest rates") Motivation: I've happen to stumble on two articles, with some weeks, that the central bank(CB) of ...
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0answers
98 views

Have all the PIIGS tried stimulus?

Greece: signs of growth come as austerity eases Last month the Greek parliament approved a stimulus programme involving highway construction that is quite large. According to the ministry of ...
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1answer
40 views

Government deficit

When the economy of a government is facing a deficit, why can't the government just increase the taxes to pay for its expenses? I've read that it should rather borrow money, because increasing the ...
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2answers
64 views

Universal Basic Income [closed]

In 2017 some countries have adopted the Universal Basic Income as an alternative to Welfare Payments, my question is, is it economically feasible by governments?
0
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1answer
186 views

Fiscal budget: spending in real vs nominal terms

What does it mean in the context of a budget to “freeze spending in real terms”? And how would this differ from freezing spending in “nominal terms”? I am looking to understand how this would be ...
0
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1answer
246 views

Debt accumulation equation derivation: valid given that it rests on calculus and the time period is a year? (nowhere near infinitesimal?)

Above is an image of what I’m referring to. The top ‘rule of thumb’ is derived using calculus, and hence is only valid for infinitesimal changes in t. However, this equation is considered over the ...
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1answer
271 views

How is reducing government expenditure supposed to reduce aggregate demand?

In my coursebook it says that in a deflationary fiscal policy governments may reduce government expenditure (such as building hospitals and road constructions) to reduce aggregate demand but I don't ...
0
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1answer
25 views

Does the separation of FinCEN, and The Federal Reserve protect the integrity of a representative democracy? [closed]

From my understanding, FinCEN is controlled or heavily influenced by the UN. In addition, The Federal Reserve is not a governmental body, yet it has appointees from the current administration. I'm ...
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1answer
43 views

Why is fiscal deficit always shown as a percentage of GDP?

If the probable reason is because it must reflect the government's ability to pay back the deficit, wouldn't government income be a better indicator, rather than GDP?
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3answers
160 views

Since it doesn't change the money supply, how can an “expansionary” fiscal policy alone spur economic growth?

I understand how monetary policy can be used to heat up an economy by increasing the money supply, but how can a fiscal policy do so? When the government borrows money to increase spending, it is not ...
0
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1answer
20 views

Is there a good mechanism to incentivize leveraged firms to take less risks?

It seems that there are some circumstances, say when the government foresees a financial crisis, where it would like firms to hedge, take less riesk etc. However, leveraged agents benefit from risk, ...
0
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1answer
4k views

How government borrowing from central bank increases money supply in economy?

Yes, public finance by government may lead to increase in money supply in economy. But, if govt borrows money from central bank, less amount of money is left with central bank to lend it to banks and ...
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0answers
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Relationship between Fiscal policy and net exports

I am confused about the relationship between fiscal policy and net exports. Suppose government goes for expansionary fiscal policy Case 1  - If public expenditure rises, income rise, rise in ...