Questions tagged [government-spending]

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13 views

Question about current account deficit [closed]

Does and increase in the government budget deficit or a decrease in household saving cause a larger current account deficit
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4 views

Dataset including decentralization of infrastructure spending?

Does anyone know if there exists a dataset of many countries (preferably developing countries and preferably with a time series) including the amount of spending on infrastructure by local government ...
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1answer
10 views

Does Medicaid or Medicare represent a higher risk to the Federal Government Solvency and Debt going forward?

I'm trying to understand not only which program is expected to be larger in terms of costs, but which one has the least capacity to adjust (reduce benefits if revenues for the program fall).
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1answer
31 views

Empirically checking efficiency and equity

I am aware that because of externalities or public goods (or for other reasons) there can be no allocative efficiency on the market. I am also aware that policy makers' subjective judgement of the ...
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1answer
15 views

Why salaries counted under Government expenditure in GDP

In the expenditure approach of GDP calculation, why are government employee's salary counted under Government approach while for private firms, we don't count salaries. I am unable to understand if ...
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2answers
66 views

When the Central Bank sells a bond, where does the money go ultimately?

As the accepted answer points out, the premise of my question was flawed. Thank you for the dispelling of my wrong assumptions. The original question follows. There are two related questions (and ...
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4answers
271 views

Tax by inflation

I am interested in a system where the state prints new money to cover all its expenses. (There is no direct tax collection.) I'm interested in anything you might have to say about this system, but to ...
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1answer
151 views

Why does capital initially reduce and then rise with an anticipated future decrease in taxes in the RCK model?

Consider the version of the RCK model where there is a government that runs a constant balanced budget. At $t_0$, the economy is in steady state, with constant tax $T_{old} > 0$ Then, at $...
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2answers
32 views

Where do public savings go?

In Mankinw's Macroeconomics, he mentions that public and private savings form national saving, which ends up in the financial sector, which then people and firms use to purchase investment goods. But ...
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1answer
76 views

How do government purchases crowd out the private sector?

I am curious about how government purchases crowd out the private sector (if it does). If we look at a graph of the composition of US GDP, it seems that government purchases and investment are ...
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1answer
39 views

Military expenditure over time

The following graph from the world bank website shows the world wide military expenditure in percentage of the world GDP over time from 1988 to 2015 I am trying to find similar data over a much ...
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2answers
76 views

Are principal payments on government bonds included in normal budget spending?

If I look, for example, at the UK government's Autumn 2017 budget document the spending piechart has a wedge which says 'net debt interest £41bn'. I notice the wording says 'interest' and not ...
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1answer
56 views

How does government spending on imported goods affect GDP?

How does government spending on imported goods affect GDP? Is it first counted as government spending and then subtracted as imports? For instance, if the US government buy a new accounting system ...
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1answer
178 views

Can a spending freeze solve the problem of the Italian enormous government debt?

In view of the upcoming Italian general election, I've been reading the program of a party (please let me know in the comments whether I can/should mention its name), and in a section of it they ...
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173 views

Does immigration help to sustain welfare in rich European countries?

There is a lot of discussions about immigration and its effect on economies lately in Europe, so I'd like to ask a question. Is it true that immigration helps to sustain welfare in rich European ...
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3answers
95 views

Do countries have to run on deficits? What is their possible economic future?

Do countries have to run on deficits? Is their future to behave and act like big companies that produce goods and services?
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1answer
292 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 ...
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2answers
127 views

Impact on interest rates of massive government spending

At the last State of the Union address, the President of the United States has reaffirmed his intentions to undertake a massive 1.5 trillion dollar infrastructure spending project over the coming ...
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175 views

Consolidated budget constraint

This is an excerpt from a data source that I am using. According to the authors it has been created from accounting identities such that it matches theoretical variables used in macroeconomics. For ...
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62 views

Government spending dynamics

I am currently reading Woodford (2010) and I have understood it for the most part. However, as I am new to solving these kind of models I have a question regarding a specific type of monetary policy ...
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1answer
420 views

Why can we finance government deficit by having a trade deficit?

I encountered an example question regarding government deficit as follows: $G-T=(S-I)-(X-M)$ where $G$ is government spending, $T$ is net tax (tax minus transfer payment), $S$ is total private ...
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4answers
39k views

Effect of lower Government spending on Loanable Funds Market

I'm having trouble with understanding what the results would be... Let's suppose the situation where the newly formed government act to cut government spending and, by doing so eliminate the ...
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1answer
91 views

Why did the Greek-bailouts 'Fail' vs Portuguese' Succeed?

Greece has required several bail-outs and is on the brink of falling back into recession. The Portugese economy has seemingly recovered. Why has recovery gone so well in Portugal but failed ...
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1answer
652 views

1929 stock market crash and unemployment rate

Thomas Sowell has repeatedly made the case that government intervention is largely responsible for the Great Depression. For example, he notes what happened with the unemployment rate in the months ...
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1answer
222 views

How much does a public sector pay rise actually cost the UK government?

This is something that's in the UK news at the moment. Public sector workers have experienced a 1% annual cap on pay increase since 2013. Government ministers are appearing on TV saying that they don'...
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1answer
73 views

Causes of recent UK Deficit

In 2008 the UK deficit was around £10Bn - in 2010 it had reached around £100Bn. I realise this was due to the "global recession" but exactly why did the deficit grow so much? My understanding is the ...
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1answer
61 views

Why do we model that higher government involvement increases output?

I have just read about the "real intertemporal" model of a macroeconomy in Macroeconomics by Stephen Williamson. I am concerned about how it says any increase in government spending, even if it is ...
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23 views

What are the main long-standing Keynesian economic programmes in Western nations?

Much of US military spending is more easily rationalised as a job-creating programme than a form of defence, e.g. vehicles Congress funds despite Pentagon insisting it doesn't need or want them or ...
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35 views

How much does a person donate to charity unintentionally [closed]

I am wondering if it's possible to estimate what percentage of a person's salary ends up in a charity even if that person never donates? I am not an economists and I am not sure if that is a valid ...
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468 views

The perception of the effects of government spending within the political world

Econ 101 teaches that government spending comes with a multiplier effect, yet whenever anyone in an election wishes to raise the size of government by even 0.5%, the right starts screaming the world ...
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2k views

How does reducing government spending increase the money supply?

According to the following question, it seems as though cutting back on government spending increases the money supply (the answer is C). The only possible explanation I can think of is that in the ...