ECN 204 Lecture Notes - Lecture 8: Fiscal Policy, Commodity Money, Money Supply
21 Apr 2016
School
Department
Course
Professor
Document Summary
Week 8 cecn 204 chapter 11 (continued) Federal: social security, transfer to provinces, interest on debt. Municipal: garbage collection + snow removal, firefighting, parks and rec. 3] g: t } deficit budget, t } surplus budget. What fp may not work in practice: wrong timing, recognition log, decision log c) Implementation log: g is inflexible downwards (easy to increase, hard to cut back, in taxes make government unpopular, getting out of recession is difficult, fp is guided more by politics. Automatic stabilizers (hst, income tax, ei welfare) work on their own [built in stability] Discretionary fiscal measures deliberate actions taken by government. E. g expanding on infrastructure temporary tax credit. If government revenue < government expenditure -> deficit -> borrowing (sells govt bonds) > debt (600b) = internal (75%) / external (25%) -> interest on debt recycled debt: raising new loans to pay back old loans (government bonds) repudiation/ default unwilling/ unable to pay back.
