ECON 2 Lecture Notes - Lecture 29: Pork Barrel, Ricardian Equivalence, Unemployment Benefits
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Y + 0 = (c+1) +i + g + x - (m+1) Tax multiplier = 0. 99: other tax-based fiscal policy considerations. Gov cannot compel people to spend; this is why middle class tax emphasized. Ricardian equivalence: if taxpayers expect a future tax to affect the current tax relief: a few specific fiscal policies are directly targeted at the labor market. Unemployment insurance, extended to 99 weeks, discourages work effort. Wage subsidies: a wage subsidy of does not raise the equilibrium wage . Policy waste: pork barrel spending; these are things that don"t have a lot of social benefit. Why isn"t the whole world developed: proximate causes of prosperity: cause of growth; technology, capital, fundamental causes of prosperity: these can be broken into 3 categories of theories. Institutional hypothesis: does empirical evidence support any of these 3, everyone agrees that the proximate causes lie in physical and human capital, and technology.
