41 votes
Accepted

Is a universal basic income possible in the United States?

This is a good question. To be concrete, I think it's easier to pick a single number - this is arbitrary, but I'll go with the figure of $10,000 offered in the proposal by Charles Murray (one of the ...
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20 votes
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What benefits do governments receive from not eliminating debt?

Most of the same considerations apply to countries as apply to businesses and people, plus a couple of extra cons Pros of Being Debt Free No interest payments Not beholden to someone else (financial ...
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  • 1,428
10 votes

What benefits do governments receive from not eliminating debt?

There is an interesting report that circulated during the Clinton administration, when we predicted we'd pay off all the debt, that I think answers your question. (here's a public radio article about ...
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8 votes
Accepted

What's quantitative easing?

Before the edit, you wrote "qualitative easing", but I think you refer to quantitative easing. I'll discuss both. Quantitative Easing Quantitative easing corresponds to the central bank (CB) ...
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8 votes
Accepted

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

Source:- Bankers cost this country £456.3bn in fraud In the UK, where the government bailed out Royal Bank of Scotland Group Plc (RBS) and Lloyds Banking Group, the total outstanding support ...
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  • 196
6 votes

What benefits do governments receive from not eliminating debt?

Suppose your country holds debt equal to thirty percent of GDP and that the government is obliged to pay interest of five percent per year on that debt. This implies that each year the cost of ...
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  • 16.6k
6 votes

How does a national budget differ from a household budget?

If you think about it, there is really not much difference between a government budget constraint and a household budget constraint. Both have uncertain income streams, which are labor and capital ...
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  • 10.4k
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 ...
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  • 42.1k
6 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 ...
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  • 42.1k
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, ...
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  • 8,437
5 votes

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

Consumers rarely have to pay the full price of petrol / gasoline. That's true in most of the world, and the US is no exception. There are explicit subsidies and favourable tax regimes in many ...
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  • 8,002
4 votes

How does a national budget differ from a household budget?

A toy model is less useful here, as the only mathematical constraint is that both must adhere to the no-ponzi condition - i.e. that whilst you might be a borrower/saver in any individual period, you ...
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  • 259
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-...
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  • 6,652
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 ...
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  • 15.8k
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 ...
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3 votes
Accepted

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

The ECB faces a unique challenge in that the Eurozone is a monetary union without a fiscal union. Because each country has autonomy over their own fiscal policy and there is no separate Eurobond, it ...
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  • 191
3 votes

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

Debt being cheaper than ever doesn't mean that it is optimal to borrow. Unless you plan to invest the borrowed money into projects that yield higher returns with certainty (we would call this ...
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  • 10.4k
3 votes

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

Here is one paper that may be of interest: Analyses of the effects of election outcomes on the economy have been hampered by the problem that economic outcomes also influence elections. We ...
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  • 15.8k
3 votes

What benefits do governments receive from not eliminating debt?

I am quite surprised that none of the answers above have mentioned the classic Barro article "Are Government Bonds Net Wealth" The way I understand it is that given that the utility function is ...
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  • 1,631
3 votes

How does a national budget differ from a household budget?

Imagine you are trying to fill a bucket with a hole in it. It's obvious you will never get the bucket filled if the hole allows more water to leave than you have power to put into it with a hose. That'...
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3 votes
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Australian Dollar Devaluation

This question is heavily reliant on the context of when it was asked. A lot has happened since February with respect to the Australian Dollar. A currency devaluation can be caused by quite a few ...
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  • 3,721
3 votes
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Federal Reserve vs National Bank

The two Banks of the United States (the First and Second) were nothing like the modern Federal Reserve system. For example, the First was prohibited from buying government bonds (one of the main ...
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  • 1,152
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 ...
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  • 338
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/...
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2 votes

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

In terms of actually getting it passed as legislation, the only evaluation that has any real significance is the one done by the CBO, as that's the official scorecard for Congress and debates that ...
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2 votes

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

First off, you are looking at the wrong column to compare like with like. Total debt went from \$16.7tr to \$17.8tr but that includes intragovernmental debt. Changes in this number will net out in ...
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  • 1,428
2 votes

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

"fraud" may have been a bit harsh, the original bloggers cite their figures: Hi Andrew, For all our articles we use information from national news organisations (for our sins). Have a look here ...
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2 votes

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

In short: yes, it very well might be and this has been argued by some (see, for example: http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/#...
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  • 1,218
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 ...
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