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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What does it mean by Global recession?

I am bit curious to understand what it actually means when I read global recession is coming soon. There are some questions which pop in my mind reading such news. Some of them are: What causes ...
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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 ...
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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, ...
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Effectiveness of fiscal policy through increased tax compliance

I am inclined to think that in a country like the USA where tax compliance is a more than respectable 83%, there is less sense in reducing tax rates in an effort to increase tax revenue through hoping ...
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Can someone please explain how personal savings and fiscal deficit are related in this context?

The lines which i have highlighted is what I want to be explained to me. This is with reference to indian economy
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Helicopter Money in the time of Covid-19

In this voxEU article by Jordi Galí, he says the following: In the current context, the central bank could credit the government's account (or governments, in the case of the ECB) for the amount of ...
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Which one of these sources best represents fiscal deficit data?

I'm currently recollecting data for an econometrics model I want to build later on with a panel data model. However, sometimes it is difficult to find certain information. For example, I want to ...
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How can autonomous private spending change budget surplus?

I was reading Keynesian economics in R.Dornbusch's book where he mentioned the defects of using budget surplus as a measure where he says it can be changed and effected by autonomous private spending ...
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Are there automatic stabilizers that react with contraction to a stagflation?

So far I know only two automatic stabilizers, namely "progressive tax system" and "unemployment benefits". Both of them would react expansionary to stagflation. During stagflation incomes of people ...
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Does fiscal policy always shift the AD more than the SRAS?

I noticed that when I read about fiscal policy and the AD-AS model, it looks implicitly assumed that when we use fiscal policy we intend to shift the AD, even when the economy experienced a negative ...
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Combining wealth and income tax

Did any country ever tried to combine wealth tax and income tax into one taxation policy? For example an income tax which has rate that is dependent on net worth, or some other tax of this manner?
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Difference type of crowding out effect in economics

In macroeconomics I came across two type of crowding out. First, in IS LM model where in classical case, when LM curve is vertical increase in government expenditures have no increase in output i.e. ...
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Spending despite fiscal deficit

This is going to be a rather simple question. Surprisingly, I did not find quite a lot of answers satisfactorily explaining my point. The question goes like this- The USA, under the Trump regime, ...
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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 ...
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Why is Crowding out more effective at full employment?

Now my professor explained to me that at full employment the increase in G (gov expenditure) shifts the IS curve to the right, but at the same time the price level increase from the rightward shift in ...
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which policy (fiscal or monetary) is better to stabilize the cycle?

I am currently studying for a test and the following sentence "In an open economy with high capital mobility, monetary policy is preferable to fiscal policy to stabilize the cycle", the "answer" is ...
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How can governments seemingly run permanent budget deficits?

How can countries afford to run budget deficits for decades on end and not become overburdened by interest payments on those debts?
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How does an elastic Money Demand affects the effectiveness of fiscal policy?

From my notes: 'The elasticity of Money Demand reduces the impact on the interest rate of the increase in government spending...' My question is: if the Money Supply is inelastic, the elasticity of ...
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Macroeconomics differences of 2008 financial crisis and 2020 economic crisis

How is 2020 financial crisis different from 2008 financial crisis? For example, why have stock market indices (e.g. S&P500, NASDAQ-100) recovered so quickly (about 3 months instead of longer than ...
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Why can't direct taxes be passed on to the consumer? [duplicate]

What stops firms increasing prices of goods in the case of an increase of a direct tax such as corporation tax?
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my economic question is based on macroeconomics [closed]

Suppose that the economywide expected future marginal product of capital is MPKf = 20 – 0.02K, where K is the future capital stock. The depreciation rate of capital, d, is 20% per period. The current ...

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