Download or read book Fiscal Stimulus to the Rescue Short Run Benefits and Potential Long Run Costs of Fiscal Deficits written by Mr.Michael Kumhof and published by International Monetary Fund. This book was released on 2009-11-01 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses the IMF's Global Integrated Monetary and Fiscal Model to compute shortrun multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt. Multipliers of two-year stimulus range from 0.2 to 2.2 depending on the fiscal instrument, the extent of monetary accommodation and the presence of a financial accelerator mechanism. A permanent 0.5 percentage point increase in the U.S. deficit to GDP ratio raises the U.S. tax burden and world real interest rates in the long run, thereby reducing U.S. and rest of the world output by 0.3-0.6 and 0.2 percent, respectively.
Download or read book Fiscal Stimulus to the Rescue written by and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses the IMF's Global Integrated Monetary and Fiscal Model to compute shortrun multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt. Multipliers of two-year stimulus range from 0.2 to 2.2 depending on the fiscal instrument, the extent of monetary accommodation and the presence of a financial accelerator mechanism. A permanent 0.5 percentage point increase in the U.S. deficit to GDP ratio raises the U.S. tax burden and world real interest rates in the long run, thereby reducing U.S. and rest of the world output by 0.3-0.6 and 0.2 percent, respectively.
Download or read book Excess Savings and Twin Deficits written by Rishabh Aggarwal and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of debt-financed fiscal transfers in a general equilibrium, heterogeneous-agent model of the world economy. In the long run, increases in government debt anywhere raise the world interest rate and increase private wealth everywhere. In the short run, a country with a larger-than-average fiscal deficit experiences both a large increase in private savings ("excess savings") and a small but persistent current account deficit (a slow-motion "twin deficit"). These patterns are consistent with the evolution of the world's balance of payments since the beginning of the Covid pandemic.
Download or read book Government investment and fiscal stimulus in the short and long runs written by Eric Michael Leeper and published by . This book was released on 2009 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper contributes to the debate about fiscal multipliers by studying the impacts of government investment in conventional neoclassical growth models. The analysis focuses on two dimensions of fiscal policy that are critical for understanding the effects of government investment: implementation delays associated with building public capital projects and expected future fiscal adjustments to debt-financed spending. Implementation delays can produce small or even negative labor and output responses in the short run; anticipated fiscal financing adjustments matter both quantitatively and qualitatively for long-run growth effects. Taken together, these two dimensions have important implications for the short-run and long-run impacts of fiscal stimulus in the form of higher government infrastructure investment. The analysis is conducted in several models with features relevant for studying government spending, including utility-yielding government consumption, time-to-build for private investment, and government production.
Download or read book Government Spending Or Tax Reduction written by and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Members have proposed several "stimulus" measures to help end the recession. A fundamental difference in competing stimulus packages is how much of the stimulus should be devoted to government spending and how much should be devoted to tax cuts. This report considers that issue in the context of conventional economic analysis. It first identifies any policy change that increases the budget deficit (or reduces a surplus) and is not entirely saved by the recipient as "stimulative" if the economy is operating below its full potential. It then separates the short-run effects of a budget deficit from the longrun effects. In this context, certain spending proposals may be more stimulative than certain tax reductions in the short run if they result in a bigger boost in aggregate spending. This advantage may come at the cost of forgone growth in the long run, however. This report will be updated as events warrant.
Download or read book Government Spending Or Tax Reduction written by Marc Labonte and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Members have proposed several "stimulus" measures to help end the recession. A fundamental difference in competing stimulus packages is how much of the stimulus should be devoted to government spending and how much should be devoted to tax cuts. This report considers that issue in the context of conventional economic analysis. It first identifies any policy change that increases the budget deficit (or reduces a surplus) and is not entirely saved by the recipient as "stimulative" if the economy is operating below its full potential. It then separates the short-run effects of a budget deficit from the longrun effects. In this context, certain spending proposals may be more stimulative than certain tax reductions in the short run if they result in a bigger boost in aggregate spending. This advantage may come at the cost of forgone growth in the long run, however. The stimulative effects of two specific types of spending proposals are analyzed, an extension and expansion of unemployment benefits and health care subsidies for unemployed workers. P.L.107-147 was signed into law on March 9, 2002. This report will not be updated.
Download or read book The Stimulus Bill written by Alex Brill and published by . This book was released on 2013 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt: While there has been much discussion in the media about the potential long-term negative impact of some healthcare reform proposals pending in Congress on the U.S. fiscal deficit, there has been scant attention paid to the potential impact of the recently enacted stimulus bill on the long-term deficit. This article identifies and discusses the policies contained within the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) that are likely to become permanent and attempts to quantify their cost. I identify more than $130 billion in annual increased spending or tax reductions likely to materialize an annual deficit increase of more than $130 billion from the extension of policies initiated in ARRA.
Download or read book The Economic Implications of the Long term Federal Budget Outlook written by Marc Labonte and published by . This book was released on 2008 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: The retirement of the baby boomers, rising life expectancy, and the rising cost of medical care are projected to place current federal policy on an unsustainable fiscal basis over the next several decades. Social Security outlays are projected to rise from 4.3% of gross domestic product (GDP) today to 6.1% of GDP in 2030, and Medicare and Medicaid outlays are projected to rise from 4.1% today to as much as 8.4% of GDP in 2030 and 12.5% of GDP in 2050. These increases in spending are not expected to subside after the baby boomers have passed away. Without any corresponding rise in revenues, this spending path would lead to unsustainably large budget deficits above 10% of GDP, which would push up interest rates and the trade deficit, crowd out private investment spending, and ultimately cause fiscal crisis. To avoid this outcome, taxes would need to be raised or expenditures would need to be reduced. Altering taxes and benefits ahead of time would reduce the size of adjustments required in the future, if the proceeds were used to increase national saving. (Making changes ahead of time would also allow individuals time to adjust their private saving behavior.) National saving can be increased by using the proceeds to pay down the national debt, purchase financial securities, or finance individual accounts. But if the budget savings is offset by new spending or tax cuts, the government's ability to finance future benefits will not have improved. Individual accounts financed by increasing the budget deficit, however, would not increase national saving or reduce the government's fiscal imbalance and could exacerbate the government's fiscal imbalance over the 75-year projection. Relatively small tax increases or benefit reductions could return Social Security to long-run solvency. Restraining the growth in Medicare and Medicaid spending is more uncertain and difficult, however. The projected increase in spending is driven more by medical spending outpacing general spending increases than by demographic change. But it is uncertain how to restrain cost growth because much of it is the result of technological innovation that makes new and expensive treatments available. If future medical spending grows more slowly than projected, then the long-term budget outlook improves dramatically. From a government-wide perspective, Social Security or Medicare trust fund assets cannot help finance future benefits because they are redeemed with general revenues. The reason revenues are not projected to rise along with outlays is that these programs are financed on a pay-as-you-go basis: current workers finance the benefits of current retirees. In the future, there will be fewer workers per retiree. Once a pay-as-you-go system is up and running and faced with an adverse demographic shift, there is no reform that can avoid making some present or future generation receive less than past generations. Under current policy, future generations will be made worse off by higher taxes or lower benefits. Under a reform that increases national saving, some of that burden would be shifted to current generations. Overall, current budget deficits remove the system's limited existing prefunding, exacerbating the future fiscal shortfall. Reducing the current budget deficit is the most straightforward and concrete step that can be taken today to reduce the future shortfall.
Download or read book Iceland written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-10-04 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, during 2008, the financial crisis lead Iceland’s public debt to soar from under 30 percent of GDP to more than 100 percent of GDP, and while underlying external debt came down sharply, it remains elevated at close to 300 percent of GDP. First, external sustainability is overviewed, and second, growth of Iceland’s economy has been challenged, and finally, fiscal adjustments and its macroeconomic impacts are overviewed. Traditional external debt sustainability analysis (DSA) suggests that Iceland’s external debt is sustainable but is vulnerable to depreciation shock.
Download or read book A European Unemployment Benefit Scheme written by Bertelsmann Stiftung and published by Verlag Bertelsmann Stiftung. This book was released on 2014-03-01 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent euro crisis and the dramatic increase of unemployment in some euro countries have triggered a renewed interest in a fiscal capacity for the European Union to stabilize the economy of its member states. One of the proposed instruments is a common European unemployment insurance. In this book Sebastian Dullien from the HTW Berlin provides and evaluates a blueprint for such a scheme. Building on lessons from the unemployment insurance in the United States of America, he outlines how a European unemployment benefit scheme could be constructed to provide significant stabilization to national business cycles, yet without strongly extending social protection in Europe. Macroeconomic stabilization effects and payment flows between countries are simulated and options, potential pitfalls and existing concerns discussed.
Download or read book It s Not All Fiscal written by Laura Jaramillo and published by International Monetary Fund. This book was released on 2015-05-26 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We attempt to disentangle income and wealth effects on consumption by disaggregating both the different types of income and wealth. We estimate a consumption function for a panel of quarterly data for 14 advanced economies spanning 1998 to 2012, using an error correction specification. We find a significant long-term relation between consumption and the different components of income and wealth. While fiscal policy had direct effects on consumption, the analysis suggests that wealth effects were sizeable, and therefore need to be kept in mind when analyzing consumption trends going forward.
Download or read book Fiscal and Debt Policies for the Future written by P. Arestis and published by Springer. This book was released on 2014-04-30 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book offers detailed analysis and informed comment on the future of emerging economic policies. It is essential reading for all postgraduates and scholars looking for expert discussion and debate on the issues surrounding economic policy.
Download or read book Asia and China in the Global Economy written by Yin-Wong Cheung and published by World Scientific. This book was released on 2011 with total page 443 pages. Available in PDF, EPUB and Kindle. Book excerpt: The volume represents a collection of papers that examine important topical themes related to the rise of China and Asia in the global economy. It offers many useful insights on several issues that are hotly debated in the international community, especially in the aftermath of the recent global financial crisis. The contributors are renowned experts from academic institutions, central banks, and international organizations. Their analyses and points of view offer valuable insights for researchers and policymakers who are interested in the recent developments in China, Asia, and the global economy. Specifically, the thirteen chapters contained in the volume address four broad themes. The first theme is on open macroeconomics and transmission mechanisms that highlight the interactions between countries in the globalization era. The second theme covers the contentious issue of renminbi valuation, which has significant implications for the debate on global imbalances. The third theme covers currency internationalization and financial markets in Asia. In particular, two chapters discuss renminbi internationalization and yen internationalization, while the other two papers examine yen carry trade and the Asian credit card market. The fourth theme is external demand and fiscal stimulus in Asian countries.
Download or read book Macroeconomic Effects of Public Pension Reforms written by Ms.Anita Tuladhar and published by International Monetary Fund. This book was released on 2010-12-01 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper explores the macroeconomic effects of three public pension reforms, namely an increase in retirement age, a reduction in benefits and an increase in contribution rates. Using a five-region version of the IMF‘s Global Integrated Monetary and Fiscal model (GIMF), we find that public pension reforms can have a positive effect on growth in both the short run, propelled by rising consumption, and in the long run, due to lower government debt crowding in higher investment. We also find that a reform action undertaken cooperatively by all regions results in larger output effects, reflecting stronger capital accumulation due to higher world savings. An increase in the retirement age reform yields the strongest impact in the short run, due to the demand effects of higher labor income and in the long run because of supply effects.
Download or read book Estimates of Potential Output and the Neutral Rate for the U S Economy written by Ali Alichi and published by International Monetary Fund. This book was released on 2018-07-06 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Estimates of potential output and the neutral short-term interest rate play important roles in policy making. However, such estimates are associated with significant uncertainty and subject to significant revisions. This paper extends the structural multivariate filter methodology by adding a monetary policy block, which allows estimating the neutral rate of interest for the U.S. economy. The addition of the monetary policy block further improves the reliability of the structural multivariate filter.
Download or read book Jointly Optimal Monetary and Fiscal Policy Rules under Borrowing Constraints written by Mr.Michael Kumhof and published by International Monetary Fund. This book was released on 2009-12-01 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the welfare properties of an economy where both monetary and fiscal policy follow simple rules, and where a subset of agents is borrowing constrained. The optimized fiscal rule is far more aggressive than automatic stabilizers, and stabilizes the income of borrowingconstrained agents, rather than output. The optimized monetary rule features super-inertia and a very low coefficient on inflation, which minimizes real wage volatility. The welfare gains of optimizing the fiscal rule are far larger than the welfare gains of optimizing the monetary rule. The preferred fiscal instruments are government spending and transfers targeted to borrowing-constrained agents.
Download or read book Republic of Korea written by International Monetary Fund. Asia and Pacific Dept and published by International Monetary Fund. This book was released on 2018-02-13 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Selected Issues chapter outlines a strategy to facilitate this and navigate the more challenging monetary environment, involving enhanced communication of policy interest rate intentions and inflation-forecast targeting. The reduction in the inflation target by a percentage point to 2 percent in January 2016 weakened the nominal anchor. Monetary policy can play a role rebuilding the credibility of the anchor more rapidly through the adoption of inflation-forecast targeting. This strengthening of the monetary policy framework involves enhancing communications. An effective, credible monetary policy cannot address all macroeconomic challenges facing Korea. Rather, it can foster robust growth with low inflation, providing a stable and predictable environment that allows other policies to work more effectively. These other policies play a complementary role. Fiscal policy can reinforce the effectiveness of monetary policy, as illustrated by model scenarios. Structural policies can also support monetary policy by, for example, boosting potential growth.
