Questions tagged [government-spending]

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What is the total that the US Government has spent on Economic Stimulus in 2020 and 2021 so far?

How much has the US government spent on the Economic Stimulus during this "time of covid"? Bonus points if it includes (and itemizes) indirect spending like spending on Covid Testing and ...
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87 views

How much revenue could an 100% land value tax be able to generate for the Indian government?

So as a Georgist (follower of Henry George), I believe most form of taxation is immoral and economically inefficient except the land value tax (not to be confused with property taxes) and other ...
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38 views

Loosely speaking, are all modern economies 'Keynesian' in their stance on spending during downturns?

Keynesian economics is defined as: increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Do all modern economies adopt a Keynesian ...
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35 views

How did the US Government fund its deficit when the Federal Reserve was pruning its balance sheet in 2018-1019?

The primary way for Governments to fund their deficits is by issuing new currency from the central bank against new treasury bonds. The Federal Reserve reduced its [balance sheet]1 from 4.4 trillion ...
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What are the 'Public Account Liabilities' of the Government of India?

In the Quarterly Report on Public Debt Management for the Quarter Jul - Sep 2020 of the Government of India, an increase in 'Public Debt Liabilities' is declared. What are they?
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35 views

What is the public spending / government expenditure share of GDP in Europe?

I have found data that seems to be contradicting: statista gives public spending at country level between 40% and 60%, but eurostat gives an aggregate figure of about 20%, as shown in the following ...
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101 views

Are quantitative easing and helicopter cash really different tactics? And how does QE relate to Modern Monetary Theory?

I've been trying to get a clear understanding of exactly what economists mean by Quantitative Easing (QE). It seems to me that different people mean different things by it. I find simplistic analogies ...
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3answers
86 views

Why doesn't government work more like a company when it comes to taxes?

In government, the revenue is fixed (most of the time); you don't have to anything extra to get money from your "investors", i.e citizens. Similarly, from a citizens' perspective, whether ...
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Why Does Deficit Spending Work Without a Liquidity Trap?

My understanding is that in a functioning economy, the financial market clears when the nominal interest rate is above zero. It is only when it reaches zero that a liquidity trap occurs and the ...
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2answers
140 views

How is the Corona $2 trilion stimulus package going to be financed?

Perhaps this is a simple question but as a non-US citizen I don't understand how the US government is going to finance the $2 trillion stimulus package to combat the economic damage due to the Corona ...
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55 views

Dynamic of 10 year UST given supply shock of the bonds that the Fed will buy into

It looks like the US government are gonna issue a lot of bonds in the near future. Basic demand/supply implies that this will lower the price of those bonds i.e higher yields. At the same time it ...
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30 views

What if the government impose both price control and supply restriction on the market?

Due to the virus outbreak, there is a surge in demand for mask and hand sanitizes. To prevent price hiking government impose a price ceiling on the products, however consumers are behaving irrational (...
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23 views

on the FRED website where do i find definitions of the variables they give charts of?

eg M3? how can we see precisely how it is defined, measured? https://fred.stlouisfed.org/series/MABMM301USM189S?fbclid=IwAR1lwaCbKUX16L1meOk6iZvloYOW0F7pIjmq9I4sb5VfvhhLhj8lsVTlpxg
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35 views

When does increasing government spending lead to economic growth and when does it lead to stagflation?

Obviously increasing government spending endlessly will lead to inflation. What I ask is: when can an increase in government spending, when the economy is in a recession, lead to economic growth ...
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Can we make any general statements about the impact of a single-payer healthcare system on an economy?

The topic of single-payer healthcare is enjoying a moment in the limelight in the US. A significant chunk of the population supports such a system, and more than a few presidential candidates have ...
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17 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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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
428 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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94 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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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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199 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
43 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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137 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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216 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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1answer
244 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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167 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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99 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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192 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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140 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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351 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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1answer
547 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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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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505 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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159 views

Why did the Greek bailouts “fail” whereas the Portuguese bailouts succeeded?

While Greece has required several bail-outs and is on the brink of falling back into recession, the Portuguese economy has seemingly recovered. Why has recovery gone so well in Portugal but failed ...
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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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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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447 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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292 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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77 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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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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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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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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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 ...
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47k 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 current ...