Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
¶ … lags are when it comes to enacting and applying fiscal policy. The second question asks about the notion of a political business cycle. The third question asks about how the expectations of a near-term policy reversal weakens when tax rates change. Finally, there will be a description of what is called the crowding out effect.
When it comes to "time lags" with fiscal policy, this basically refers to the fact that there is a time lapse between the time that a piece of fiscal legislation is passed and point in which results can be seen or measured. For example, when the fiscal stimulus passed (the ARRA) in 2009, there was expected to be a gap between the time it was passed and the time it showed any sort of demonstrable effect on the economy (Economics Online, 2015). As for the political business cycle, Auburn University describes that term as meaning "a business cycle that results primarily from the manipulation of policy tools (fiscal policy, monetary policy) by incumbent politicians trying to stimulate the economy….." The aforementioned ARRA would be an example of that as well (Auburn, 2015). Tax rates would certainly have an effect on policy reversals and changes since tax rates would be one of...
For example, some may hold that a lowering of tax rates might raise revenues due to increase economic activity while others may hold that it would decrease revenues overall. It could certainly go both ways depending on the factors involved. An example of it going generally badly would be Kansas and with Governor Brownback. He lowered taxes to spur economic growth and shortfalls followed. Indeed, tax rates are just one consideration when it comes to the ebbs and flows of fiscal policy (Haltiwanger, 2013). Lastly, there is the definition of the "crowding out effect." Per Investopedia, the term refers to when the public sector replaces or otherwise inhibits private sector spending. Put another way, it is when "government must finance its spending with taxes and/or with deficit spending, leave businesses with less money and effectively 'crowding them out' " (Investopedia, 2015).
Conclusion
Fiscal policy can be a very complicated thing. It is not an exact science and it is very hard to differentiate between causality and simple correlation when it comes to economics. Even so, there are general tenets…
References
Auburn,. (2015). Political business cycle: A Glossary of Political Economy Terms - Dr. Paul M. Johnson. Auburn.edu. Retrieved 16 June 2015, from https://www.auburn.edu/~johnspm/gloss/political_business_cycle
Economics Online,. (2015). Fiscal policy. Economicsonline.co.uk. Retrieved 16 June 2015, from http://www.economicsonline.co.uk/Managing_the_economy/Fiscal_policy.html
Haltiwanger, J. (2013). Who Creates Jobs? Small vs. Large vs. Young. Review Of Economics And Statistics, 95(2), 347-361. doi:10.1162/rest_a_00288
Investopedia,. (2003). Crowding Out Effect Definition | Investopedia. Investopedia. Retrieved 16 June 2015, from http://www.investopedia.com/terms/c/crowdingouteffect.asp
Territoriality, Privacy, and Personal Space Territoriality In order to comprehend territory's significance- or that of any manifestation of territory, such as states, nations, homelands or landscapes - it is expedient to start by considering the raw material that supports these structures. The raw material mentioned above is known as 'space'; it is extraordinarily difficult to give a definition to space. Through territoriality, individual places are built, and this process enables individuals
Economics The Keynesian economic theorists follow an economic model that considers three factors in macroeconomic growth. These are income distribution, savings, and investment functions. These factors are derived from the theory's determination of equilibrium in the economy as determined by the relationship between employment, prices, and gross-domestic-product (Padalkina 18). The theory suggests that the economy does not have full employment, autonomous demand-component affect rate of growth, and investment decisions are not
Expenditures on health care has been mounting faster than the economy for many years, representing a challenge not only for the government's health insurance programs, but also for the private sector. As health care expenditures consume a larger share of the nation's economic output, Virginians along with all Americans will be faced with progressively harder choices to make (the Long-Term Outlook for Health Care Spending, n.d.). Works Cited "About Your Benefits."
Deficit Spending What is deficit spending and how does it work Deficit spending takes place when the government expenditures surpass the government revenues in a fiscal period, which in turn increases government debt balance. This surplus spending has to be financed through borrowing, more often from global financing establishments and foreign governments. On one hand, the augmented government spending can facilitate stimulate the economy taking into account more money flows in. On
(Shactman; Altman, 2002) 4. Recommendations for Overcoming these Barriers: Some of the suggestions for overcoming these barriers are (i) appointment of a General Practitioner -- GP officers to work as a Liaison Officer between the ED and the community so that the communication is streamlined as well as processes of referral and feedback and development of clinical pathways. (ii) Expansion of community off-peak facilities, including the setting up of the capacity
Forgiveness on human health. In its simplest form, the purpose of the study is to evaluate human psychological stress that might constitute a risk factor for heart disease. Further, the study will also evaluate the impact of forgiveness on heart disease. However, such a simple dissertation clearly demands further definition. What, exactly, do we signify when we speak of heart disease? What is properly considered as forgiveness? What impact does