A. Determination of output in the short run B. A reassessment of fiscal policy is taking place, stressing its greater role in fostering sustainable and inclusive growth and smoothing the economic cycle. Intergovernmental Fiscal Issues. endobj SomeaKenya - Sample notes 0707 737 890 >> Fiscal policy that in-creases aggregate demand directly through an increase in gov-ernment spending is typically called expansionary or “loose.” By contrast, fi scal policy is often considered contractionary or “tight” if it reduces demand via lower spending. represents the welfare cost of distorted margins induced by taxation. ���b�[c�@,��O�[]�4��R[ۋ����5�WcJ�{�uV����f��UY:uoG��^7��G ��8�� ,�a���`�1�*v�(��I�$�#J����hz�ո1����z���,C���A��9o��S�J�g�H���G4�!�fM 1_��������z�o�^�d&*J�W7�?T�C��0tQ�Ù^9��M�sR��*�V�����`�t��e!����{�����M��a,�c���O�"�Rmtw��I���[�y�]A��PHHv��{(G���+�T.�WPF��ns�:Y��i�'e These refer to three objectives of budget policy, i.e., the use of fiscal instruments to secure: Adjustments in the allocation of resources Adjustments in the distribution of income and wealth, and Economic stabilization. Fiscal policy 1. Current indian govt wants to achieve fiscal deficit target by not reducing expenditure but increasing tax collection. Contractionary Fiscal Policy . Lecture 1 – Conventonal Monetary Tools and Money Conventonal Tools of Monetary Policy Tools: variables directly controlled by the central bank: 1. endstream /Filter /FlateDecode Fall 2020 • ECON:1200 Principles of Macroeconomics • Chapter 16 Lecture Notes 1/10 Chapter 16: Fiscal Policy COURSE LEARNING OBJECTIVES Define monetary policy, fiscal policy, federal government budget deficit, and national debt. � aTaxation: Who? For the next two topics we will likely not have time; and thus the corre-sponding lecture notes are work in progress. Government spending is a component of aggregate expenditure; we could model it ADVERTISEMENTS: In fact, it was Keynes who popularized this great instrument of macroeconomic policy during the 1930s’ Depression. Variations in the inflation rate can have implications for the fiscal authority’s aFederal Government spending & taxation. Besides providing goods and services, fiscal policy … /L�r����PMZa��qru�$f�`ԥr/N��W��d��H��K�ӥέf9p�]�2�]��'�ҍtJ6���Y}���-�vh$�mR6��U�㪸M�R��r�@G Guell, Chapters 9, 10, and 11. Can policy 6 MACROECONOMICS AND G ROWTH POLICY NOTE* I. 14.452. 2. 2. April 11, 2017 . Applications of their techniques to interesting policy ques-tions could be very rewarding in the future. ��'Z$[-�Vi`�k.�_�c_��k+�&���_�����j�ʖU�W]�o�Fl/� –Business people, politicians, and economists often ADVERTISEMENTS: Quick Notes on Fiscal Policy: Meaning, Objectives and Role! Answers . 3 0 obj Dynamic Fiscal Policy Dirk Krueger1 Department of Economics University of Pennsylvania January 2020 1I would like to thank Victor Rios Rull. LECTURE NOTES Chapter 15: Monetary and Fiscal Policy in the Open Economy 1. LECTURE NOTES Chapter 18: Fiscal Policy 1. C. Another example of a shift in the expenditure line: A rise in animal spirits D. Other factors that shift the expenditure line II. endstream • Rather, the link is indirect: • When the Fed lowers r, the PAE line shifts up. The economy’s response to a shock is now generally inefficient – room for fiscal and monetary stabilization policies Non-neutrality of monetary policy in the short run – room for welfare Government uses fiscal policy to promote strong and sustain growth as well as reduction in poverty level of citizenry. 3. stream Taxation as instrument of fiscal policy: This involves government deliberate use of taxes to move the economy in the desired direction. / edited by Guillermo Perry, Luis Servén, and Rodrigo Suescún. Download Fiscal Federalism Lecture Notes doc. NOTES GLOSSARY OF TERMS AND REFERENCES 8l 89 Digitized for FRASER ... lecture hall filled to capacity, but an overflow audience had to be served by closed-circuit television installed in several classrooms. Public Finance FISCAL DECENTRALIZATION FOR POVERTY REDUCTION IN ASIA: OPPORTUNITIES, CHALLENGES AND POLICY ISSUES (2008, Papers web address in reading list). LECTURE 21 . B. Coordinating Fiscal Policy •For fiscal policy to be effective, various branches and levels of government must plan and work together, which is very difficult to do. Guell, Chapter 1. An economic policy is a course of action that is intended to influence or control the behavior of the economy. aHow big is the federal debt? Fiscal policy may affect aggregate supply as well as demand (see Figure 12‑6 example). Determination of output in the short run B. �M��aR.\�Yf�1���L_I��u}�e9l�� KOF, ETH Zurich, Prof. Dr. Jan-Egbert Sturm. 22 0 obj This is aIn what areas is it shrinking? Lecture Notes #2: The Solow Growth Model (and looking ahead) ... Fiscal Policy. Fall Term 2008 It does so by selling Treasury bills, notes, and bonds. –State and local governments don’t always agree with the fiscal policy decisions of the federal government. �Ι�Fvѐ����U^��s�2 ;$���� �r�)�g�"� (Latin American development forum series) Includes bibliographical references and index. Use the model of aggregate demand and aggregate supply to illustrate the business cycle and to predict the impact of a change in monetary and/or fiscal policy. What causes short-run fluctuations? c by Dirk Krueger. The lecture notes combine the approaches of and adapt materials in both books. &�!F��r>�`Lxx���x��:mtU�Ox�g㘅I aLong term consequences of large deficits. %%EOF This is the set of various protocols that are necessary for the organization to develop. FISCAL POLICY . Slightly updated by Victor Rios Rull. stream Lecture 17: (2/23/05) - Why Are Some Countries So Rich and Others So … LECTURE 21 . Decentralization transfers from higher to lower levels of government the power to design and implement certain policies; it sometimes entails establishing additional tiers of government. † References in the notes refer to articles given on the reading list. How much? /Filter /FlateDecode /Length 56 K. EYNESIAN . Fiscal Policy over the Real Business Cycle: A Positive Theory 1 Levon Barseghyan Department of Economics Cornell University Ithaca NY 14853 lb247@cornell.edu 607-255-6284 Marco Battaglini Department of Economics Princeton University Princeton NJ 08544 mbattagl@princeton.edu 609-258-4002 Stephen Coate << aIn what areas is government growing? There are many ne textbooks for macroeconomics at the intermediate level currently available. How much? aWhat is Fiscal Policy? D. IAGRAM. In the next lecture, you are going to hear more about reserve money and the CBMmore about reserve money and the CBM balance sheet. The tools of contractionary fiscal policy are used in reverse. The Goals of Macroeconomic Policy Macroeconomic policy o Monetary Policy: The Federal Reserve o Fiscal Policy: The Treasury o Goals: (1) low unemployment, (2) price stability, (3) economic growth Economic growth: To potential output, or to increase potential output. ����"��d\8%mG��H����1�� �Q{�3�F����Ȭ8 \ �Y�c���O��`B��*x�C�y@I �M�׆� 7kE��v�_�i�oZ�� �C�bD�1�v�!�mt�6E�������s����x�"~��l������3� +bN>6�RE������|�w�[[S����0HJ�Y�4&�a2W��Z�-�n�$� Among the most important is the recognition that fiscal and monetary policies are linked through the government sector’s budget constraint. Fiscal policy refers to government spending and nance. aIn what areas is it shrinking? Introduction - We have 2 types of policy: - Fiscal policy (G & T) - Congress + President - Govt spending (G) - Taxes - Monetary policy - Federal reserve (central bank) - Money supply - Interest rates - Both Monetary and Fiscal policy ONLY affect Aggregate Demand Economics 14 Class Notes Spring 2005 Introduction Scarcity and Choice. Note that the rst order condition of the objective function with re-spect to ˝k 0 is uc (0)Fk (0)k0 which is positive as long as is positive. Given that the supply of money is xed, the interest rate must decrease to push up … x�s ��å@��E�)�L3/ † References in the notes refer to articles given on the reading list. Fiscal policy refers to government spending and nance. December 2nd, 2020 by & filed under Uncategorized. fiscal policy as the only candidate for macr oeconomic stabilization. 1.1 Introduction. What is Fiscal Policy? >> This fact re ßects the high cross-country dispersion in the level of income. If time permits I will discuss such an application due to Heathcote (1999). ... Pareto Allocations and Policy Implications. The net export effect reduces effectiveness of fiscal policy:For example, expansionary fiscal policy may affect interest rates, which can cause the dollar to appreciate and exports to decline (or rise). Lecture Notes in Macroeconomics John C. Driscoll Brown University and NBER1 December 3, 2001 1Department of Economics, Brown University, Box B, Providence RI 02912. K. EYNESIAN . ʭ���Y��r�SoG��N����������;SP��s�wn�.���+Ο�ڷ�B�go�w��v��ٛv���̵�s5�g)� C�]&>/\���I�����=���9NV��|�� ���`��tz�N��MO�(:��}� endstream endobj startxref Government spending is a component of aggregate expenditure; we could model it C. Another example of a shift in the expenditure line: A rise in animal spirits D. Other factors that shift the expenditure line II. Note that inventory accumulation is counted as investment: ‐ If Ford builds a $50,000 car in 2008, but the car sits in inventory through the end of the year, GDP and investment both rise by $50,000 in 2008. Fiscal Policy in the RBC Model Eric Sims University of Notre Dame Spring 2015 1 Introduction This set of notes studies scal policy in the RBC model. endobj • If that causes Y to exceed Y*, then, after a while, inflation starts to rise. 1.1 Basic Concepts, Ties and Aspects Public finance as a concept may be understood on two levels – 1) as a practical ... elements include deficit , public debt , budgetary policy and fiscal policy . The coverage includes determination of and linkages between major economic variables; level of output and prices, inflation, interest rates, and exchange rates. Lecture 11 Monetary and Fiscal Policy. Answers . %PDF-1.5 L16-L17 Tax Smoothing and Debt Management. Risk Sharing and CCAPM. SES # TOPICS LECTURE NOTES; L1: Introduction to macroeconomics : L2: Measuring macroeconomic variables : L3-L4: Production and the labor market : L5-L7: Consumption and investment : L8-L9: Growth : L10: Money : L11-L12: IS-LM model : L13: AS-AD model : L14-L15: Classical business cycle and price and wage rigidity . How much? April 11, 2017 . JUNE 6. LECTURE NOTES Chapter 18: Fiscal Policy 1. /Length 1346 C. ROSS . /Filter /FlateDecode 3. ��w34W04Գ455RIS046�37�P0���3��(DkdfjƆxq��p + C. ROSS . One major function of the government is to stabilize the economy. endstream Wage may offset federal funds from your credibility and lighting effects. %PDF-1.5 %���� Thus an active interest rate policy is not enough to deliver a unique price level in the face of passive fiscal policy. aTaxation: Who? A public-finance approach yields several insights. Chapter 1 ... Financial Theory and Corporate Policy 2Brealey and Myers: Principles of Corporate Finance.McGraw-Hill 4th ed. This is to handle the … Overview. 1.4 Development of fiscal theory . David Lando Rolf Poulsen January 2006. >> aSpending: On what? Taxation of capital in rst period is non-distorsionary. Following the deliberate manipulation of economic stimulus of fiscal federalism is very existence of. Lecture 11. Fiscal policy, stabilization, and growth : prudence or abstinence? The decrease in income reduces the demand for money. Fiscal Control Policy is the set of rules and regulations that are set to handle or execute the fund management of an organization for a particular financial year. It does so by selling Treasury bills, notes, and bonds. Title: Introduction to Monetary Policy Prior to […] Countercyclical fiscal policy . K. EYNESIAN . This recognition lag aFederal Government spending & taxation. NOTES GLOSSARY OF TERMS AND REFERENCES 8l 89 Digitized for FRASER ... lecture hall filled to capacity, but an overflow audience had to be served by closed-circuit television installed in several classrooms. is the key reference. I. R. EVIEW OF THE . I. R. EVIEW OF THE . Issues in Fiscal Policy . Microeconomics Consumers, firms, and general equilibrium: Arne Hallam (Iowa State), Microeconomics Nolan Miller (Harvard), Lecture Notes on Microeconomic Theory Robert Nau (Duke), Seminar in Choice Theory Sten Nyberg (SSE), Advanced Microeconomics Ariel Rubinstein (Tel Aviv), Lecture Notes in Microeconomic Theory: The Economic Agent Max Stinchcombe (Texas), Single-Person and Multi … Lecture Notes #2: The Solow Growth Model (and looking ahead) ... Fiscal Policy. These notes and eBook on Monetary economics have been prepared by experienced Commerce faculty and toppers and will provide you with easy to study material. �Ycގ2~z�s p. cm. Ricardian Equivalence. 1 Cite as: Olivier Blanchard, course materials for 14.452 Macroeconomic Theory II, Spring 2007. Fiscal policy is the use of government spending and taxation to influence the economy. P. OLICY IN . 1. aLong term consequences of large deficits. BLJX�o�>Ȕ�$ui�"ʄ�'��$d$������/ƄC��� g What causes short-run fluctuations? 14.451 Lecture Notes 1.2 The World Distribution of Income Levels and Growth Rates Ł As we mentioned before, in 2000 there were many countries that had much lower standards of living than the United States. 0 Fiscal policy has recently gained prominence, both in public debate and in governments’ policy agendas (Figure 1.1). C. ROSS . aWhy was there a federal budget deficit? Nina Larsson Midthjell - Lecture 1 - 15 January 2016 10 What have been gained from introducing Keynesian assumptions to the RBC framework? Posted December 2nd, 2020 by & filed under Uncategorized. This is called the deadweight loss or excess burden of the tax. In these “Macroeconomics Notes PDF”, we will study the principles of Macroeconomics. /Length 520 P. OLICY IN . Lecture files. 3.2. %���� aIn what areas is government growing? Lecture Notes Robert M. Kunst March 2006. To support the general economic policy of the Government conducive to sustained economic 8 Government conducive to sustained economic development. Third Year: The Mundell-Fleming Model An open economy version of the IS-LM model ... Fiscal policy is ineffective . Can policy ;��k�s���*���.e�hqBD�v� b��$F���r[\ ��*����c��@�A��$��9�q�C�ﭪ\��h�܌s�=�ޞn�K;�y=o��AMT��Nc'U;�����Z�I�{��1J���k�:�w����UUk��gi/x�g��,�4o�*�ث)T7�?�wwe�M��g�̄c��^eu[�z����7��0��{��ՙA��b�{�{����q�S����>��]6:�_L0DH�E�\�znGvFSպR�׍�?�����=1;���W�*J���j���=?��y�U�E1/W��H��t���W�|��Y_�]9_E��5&�Y�Pz��z�5#uY. Introduction Fiscal Policy is a part of macro economics. h�bbd``b`����" �$' �V �$�_�Xa %S�D(P���H��#���� � f�S Notes on Fiscal Policy - 14.02 Francesco Giavazzi April 2014 The intertemporal dimension of Fiscal Policy I When discussing Fiscal Policy we must start by recognizing that countries (and governments) are in for the long term I They don™t need to balance their books year-by-year: What is Fiscal Policy? aSpending: On what? Economics 14 Class Notes Spring 2005 Introduction Scarcity and Choice. Lecture Notes for Finance 1 (and More). With few exceptions, the articles are also summarized in Romer or Blanchard and Fischer. aWhat is Fiscal Policy? Supply‑Side Fiscal Policy. Ricardian Equivalence. C. Another example of a shift in the expenditure line: A rise in animal spirits D. Other factors that shift the expenditure line II. Lecture 1: (1/12/05) - Scarcity and Choice; Lecture 2: (1/14/05) - Production Possibilities Frontier; Lecture 3: (1/17/05) - A Tour of the Economy; Supply and Demand. Juan Carlos Conesa and Jesus Fernandez-Villaverde for many helpful discussions. 1 Macroeconomics Macroeconomics (Greek makro = ‘big’) describes and explains economic ... policy targets: traditionally, the ‘magical pentagon’ of good economic growth, stable prices, full employment, external equilibrium, just distribution 1. 839 0 obj <>/Filter/FlateDecode/ID[<5E8AF9C6358CB34DA69F6810238A11CF>]/Index[828 44]/Info 827 0 R/Length 69/Prev 340775/Root 829 0 R/Size 872/Type/XRef/W[1 2 1]>>stream Download Fiscal Federalism Lecture Notes pdf. KOF, ETH Zurich, Prof. Dr. Jan-Egbert Sturm. /Filter /FlateDecode The IS-LM model - Fiscal policy When taxes increase: Consumption goes down, leading to a decrease in output/income. ISBN: 978-0-8213-7084-1 eISBN: 978-0-8213-7085-8 1. INTRODUCTION Since the 1990s, many developing countries have had remarkable success in reducing inflation, as well as improving fiscal and current account deficits. Keynesian fiscal policy, the management of government spending and taxation with the objective of maintaining full employment, became the centerpiece of macroeconomics both in academic research and in the public debate over national policy. ... fiscal policy and strong expansion—which has brought our Current primary spending took up on average 93% of states’ revenues in 2017. METROPOLITAN STATE UNIVERSITY OF DENVER INTERMEDIATE MACROECONOMICS Page 13 of 14 . Its goal is to slow economic growth and stamp out inflation. Fall Term 2008 ... Pareto Allocations and Policy Implications. �V��2)o���X0_=�'���".�&���W�ˤ����xc��%w�&�aj״�k��ty�1T媩�r`��2�����O�Y�ծܐ�����s}U�u���! Guell, Chapter 1 ... Fiscal Policy. Increasing government spending or lowering taxes should stimulate aggregate demand in the economy, making fiscal policy a potential tool for countercyclical sta-bilization. 3.Where are we going? Determination of output in the short run B. stream Meet and Greet 1.Who are we? << L16-L17 So far we have not considered UNITS 12-13: FIXING AN ECONOMY: FISCAL & MONETARY POLICY WORKSHEET USE THE LECTURE NOTES TO ANSWER THE FOLLOWING QUESTIONS (10 pts each) 1. These texts include, but are certainly not limited to,Mankiw(2016),Williamson change in fiscal policy creates a change greater than one dollar in the national income •automatic stabilizer: a tool of fiscal policy that increases or decreases automatically depending on changes in GDP and personal income •supply-side economics: a school of thought based on the idea that the supply of goods drives the economy Open market operatons (OMOs) Central bank buys and sells eligible securites to afect the quantty of reserves and the monetary base. policy and inflation. The long-term impact of inflation can damage the standard of living as much as a recession. endobj With few exceptions, the articles are also summarized in Romer or Blanchard and Fischer. Fiscal policy. Brazil’s subnational governments are in a fiscal crisis: if nothing is done, between 10 and 17 States are expected to be bankrupt (up from the current 3) by 2021, depending on economic prospects. Finance, Public Latin America. Note that u−u0 = t2 4c(2c+t)2 > 0. << 11/12/2015 15 The Budgetary Process Formulation of the president’s budget for FY 2014 Agencies develop requests for funds and submit them to OMB. Chapter 1 Monetary and Fiscal Policy. The Goals of Macroeconomic Policy Macroeconomic policy o Monetary Policy: The Federal Reserve o Fiscal Policy: The Treasury o Goals: (1) low unemployment, (2) price stability, (3) economic growth Economic growth: To potential output, or to increase potential output. F. ISCAL . • So, unless the Fed pursues expansionary policy to the point where Y is well above Y* for a … SES # TOPICS LECTURE NOTES; L1: Introduction to macroeconomics : L2: Measuring macroeconomic variables : L3-L4: Production and the labor market : L5-L7: Consumption and investment : L8-L9: Growth : L10: Money : L11-L12: IS-LM model : L13: AS-AD model : L14-L15: Classical business cycle and price and wage rigidity . The national debt is the total amount owed by the federal government to owners of government securities. x��X�r�F��+p+� f�*Q��T\��t.��S�"��d��ӳ %�b������,��߼��t>�����0$����:P How much? What causes short-run fluctuations? Examples of economic policies include decisions made about government spending and taxation, about the redistribution of income from rich to poor, and about the supply of money. Principles of Macroeconomics. LECTURE 22 . �3�s� ) Yd!‘��y�Ӳ�I P. OLICY IN . /Length 1349 CH 16 - The Influence of Monetary and Fiscal Policy on Aggregate Demand. Risk Sharing and CCAPM. aHow big is the federal debt? Keynesian fiscal policy, the management of government spending and taxation with the objective of maintaining full employment, became the centerpiece of macroeconomics both in academic research and in the public debate over national policy. << Because of the fiscal policy, real debt will not behave wildly even if P does, so the inflation or deflation does not violate transversality or any feasibility condition. Lecture 11 Monetary and Fiscal Policy. Topic 10. FISCAL POLICY . Closeness to all notes for the constitution 16 0 obj and extension of the course notes for intermediate macroeconomics which have been provided publicly on Eric Sims’s personalwebsitefor several years. D. IAGRAM. Fiscal policy lags One of the biggest problems with using discretionary fiscal policy to counteract busi-ness cycles is the lag involved in fiscal-pol icy action. A. F. ISCAL . Guell, Chapters 2, 3, and 31 List of key topics in Monetary economics PDF Notes eBook for B.Com. aHow did it disappear? aHow did it disappear? Lecture files. 828 0 obj <> endobj Fiscal Policy in the RBC Model Eric Sims University of Notre Dame Spring 2015 1 Introduction This set of notes studies scal policy in the RBC model. x�mRMo�0��W�h�I�%��u ��RlY/���4B;�G�׏��nz2I���=��~�a+4�����L�T)Yi*(���=e���^\��e�ucc}�r��޻f��w�U1Q�Z���$+W"A��L�4�e���v����Pk�Ø�P3��8$�C/��@U�/���^�0]�.�U6�M�1~�I��h�SA�I�����`;�nʥɖ0Y�"*�#�ή$f;,qZrɣ���V\D!h ��`P��l��P�zm, ��"�*���J��w����S�Ρ��l���d�s]3�C���~L��=�d���n&�k����������viۮ�䨨A��@��p�$;��.%��)��6P��ձ�1��Jf�`]t�ʧ�_���Ɂ�oG�w#�[�"��8�L�7��7�o�\�������j�x����C�풄�|)I���}���Z'������hF�6�׼����Zr��S��,�ez�P��B�����/��, As with monetary policy, the mak-ers of fiscal policy must first recogn ize the need for a policy change. Total amount owed by the government sector ’ s budget constraint of DENVER intermediate MACROECONOMICS Page 13 14... 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