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23 votes
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Is there any way retirement systems can cope with declining population?

There is no magic trick that the government can use to solve this issue. Government pensions can be kept funded by: Increasing taxes Reducing benefits Raising the retirement age Increasing population ...
Leeh Mizrahi's user avatar
8 votes

Is there any way retirement systems can cope with declining population?

Is there any way government pension systems can be reformed to in a way they are proofed against changes in the ratio of economically active and dependent people? I think a very basic exmination from ...
Nobody's user avatar
  • 183
7 votes
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What would monetarists do when interest rates approach zero and become ineffective?

An excellent overview of not just monetarist view on this issue but all other mainstream views on monetary policy at zero lower bound (ZLB) can be found in Ullersma (2002) The Zero Lower Bound on ...
1muflon1's user avatar
  • 57k
6 votes
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Why did John Keynes believe that monetary policy to be less effective than fiscal policy?

This was due to the idea of liquidity trap, and due to Keynes thinking that in economic recession it is easy for an economy to slip into the liquidity trap. Liquidity trap is a situation where ...
1muflon1's user avatar
  • 57k
5 votes

Is a universal basic income possible in the United States?

A new report by the Roosevelt Institute answers exactly that using a Keynesian, Stock-Flow-Consistent model calibrated to the US. According to their result, when distributional changes are considered, ...
luchonacho's user avatar
  • 8,591
4 votes
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Are there economic policies that help countries fight corruption?

Kaushik Basu has proposed (Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal) legalizing paying bribes to separate the ties of criminality between the bribe payer and ...
BKay's user avatar
  • 16.3k
4 votes
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What do economist state as evidence that "structural reform" works?

A rather positive view of structural reforms In their recent Economic Policy Reforms 2016, Going for Growth Interim Report, the OECD reviews the main growth challenges faced by OECD and selected non-...
emeryville's user avatar
  • 6,975
4 votes
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Government deficit

Firstly, a fiscal deficit is not very surprising. Governments normally want to keep its stock of liabilities (government-issued money and bonds) at least stable as a percentage of GDP. (This provides ...
Brian Romanchuk's user avatar
3 votes

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

Central banks can create money 'out of nothing'. So for starters there isn't 'less amount' of money left with the central bank. The amount of money at the central bank is 'infinite'. So it's not ...
tibo's user avatar
  • 328
3 votes

Difference type of crowding out effect in economics

A vertical LM curve means that any change in government expenditure will result in a change of the interest rate which exactly offsets the initial change of public demand (private demand increases/...
daniel_JKU's user avatar
3 votes
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stochastic optimal control/FOC/Reis(2021)

I think the "standard" approach in solving HJB equations like this is to guess a form for $V$ and then verify. Your first order conditions for $c/a$ and $k/a$ are right. Now, guess that $V(a,...
Wittgenstein's Poker's user avatar
3 votes
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Question about how NPV was used in this 2010 Obama proposal

As mentioned in my comment, the first year has no need for discounting because it is the same as if you expense immediately, just a smaller sum. Subsequent years are using mid year discounting - the ...
AKdemy's user avatar
  • 4,122
2 votes

Economic effects of a Commons Capital Depository

Has anything like his proposed commons capital depository ever been tried in practice? Sweden had such experiment, but in a much lower scale than it was originally planned and of what Varoufakis is ...
luchonacho's user avatar
  • 8,591
2 votes
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Debt accumulation equation derivation: valid given that it rests on calculus and the time period is a year? (nowhere near infinitesimal?)

$$\frac {\Delta d_{t+1}}{d_t} = \frac {\frac {D_{t+1}}{Y_{t+1}}-\frac {D_{t}}{Y_{t}}}{\frac {D_{t}}{Y_{t}}} = \frac {D_{t+1}Y_{t}-D_{t}Y_{t+1}}{D_{t}Y_{t+1}}$$ $$=\frac {D_{t+1}Y_{t}}{{D_{t}Y_{t+1}}}...
Alecos Papadopoulos's user avatar
2 votes

How is reducing government expenditure supposed to reduce aggregate demand?

Aggregate demand is the total domestic demand for goods and services in an economy. Cutting government spending could reduce aggregate two ways. Direct. Government demand is obviously lower, and is a ...
Brian Romanchuk's user avatar
2 votes
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Does the separation of FinCEN, and The Federal Reserve protect the integrity of a representative democracy?

Your understanding is wrong. FinCEN is a bureau of the United States Department of the Treasury. The director reports to the Secretary of the Treasury, who is appointed by the President and confirmed ...
dismalscience's user avatar
2 votes

What is fiscal impulse?

Fiscal impulse is synonymous with fiscal stimulus. This article defines a fiscal impulse as: the additional financial impact of government finances on the economy relative to a reference situation ...
luchonacho's user avatar
  • 8,591
2 votes
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What is the effect of expansionary fiscal policy in case liquidity trap situation?

I will try to explain this through ISLM model. Consider you are an employee working for the government and earn \$1000 per month. Government follows expansionary fiscal policy and increases your pay ...
DrStrangeLove's user avatar
2 votes

Fiscal budget: spending in real vs nominal terms

If there is no inflation then the two phrases would mean the same But if there is positive inflation, then "freezing spending in nominal terms" would involve spending the same amount of money, and ...
Henry's user avatar
  • 4,765
2 votes

What does it mean by Global recession?

Let me start from the bottom up. "[...] is there a bigger picture which I am missing that all this global recession can be a planned activity by major economies every few years/decades to achieve ...
Regio's user avatar
  • 4,188
2 votes

Where to find information to establish causation between economic policies and economic data?

You might be inspired by Joshua Angrist (MIT) who talks in this podcast about the craft of econometrics--how to use economic thinking and statistical methods to make sense of data and uncover ...
emeryville's user avatar
  • 6,975
2 votes

The link between economic growth, inflation, interest rates and fiscal deficit

First, note, that 3% is not debt to GDP but growth rate of debt (or in another words deficit). It’s not debt to GDP. The statement in the textbook is based on a on a back of the envelope calculations ...
1muflon1's user avatar
  • 57k
2 votes

Why there's a large difference between fiscal deficit and debt to GDP ratio of a country?

Because debt to GDP is measured as total debt country has divided by GDP, which is done to compare the debt to the size of economy ($D/GDP$) Fiscal deficit is a negative difference between tax revenue ...
1muflon1's user avatar
  • 57k
1 vote

Monetary policy rate and fiscal deficit

Increasing interest rate will also increase the government borrowing costs, central banks are operated by government. If they are not sufficiently independent they will try to do what is best for the ...
csilvia's user avatar
  • 2,734
1 vote

Monetary policy rate and fiscal deficit

If a country is on a deficit it would want to keep rates low since it will most likely have to borrow money to pay for it's deficit. It also has the possibility of debasing it's currency which in turn ...
Carl Kristensen's user avatar
1 vote
Accepted

Macroeconomics differences of 2008 financial crisis and 2020 economic crisis

There are a lot of differences between the two crises + how these differences manifest in the stock market. First, on the point of the stock market- it's "kinda" an indicator of the overall ...
C. Kang's user avatar
  • 166
1 vote
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The government does not need to gather capital via tax and Treasuries to spend? According to MMT

There are a number of points in this question, and I do not want to write too long a response that goes too far into opinions. I will note that I am a proponent of Modern Monetary Theory (MMT). I ...
Brian Romanchuk's user avatar
1 vote

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

Luxury goods tend to be Veblen goods, so reducing taxes on them doesn't make them more attractive. They also tend to be goods whose value is mainly based on scarcity, so increasing demand doesn't ...
Acccumulation's user avatar
1 vote

How does a govt surplus increases investment?

The increase in savings you described does happen, in the short-run. Remember, tho, investment and savings are flows. Accounting identities provide us truths about their ex-post behavior, not planned ...
Pedro Cavalcante's user avatar

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