經(jīng)濟(jì)學(xué)英文教學(xué)課件：KW2-Ch29 Fiscal Policy

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29>>?2009WorthPublishersFiscalPolicyWhatfiscalpolicyisandwhyitisanimportanttoolinmanagingeconomicfluctuationsWhichpoliciesconstituteanexpansionaryfiscalpolicyandwhichconstituteacontractionaryfiscalpolicyWhyfiscalpolicyhasamultipliereffectandhowthiseffectisinfluencedbyautomaticstabilizersWhygovernmentscalculatethecyclicallyadjustedbudgetbalanceWhyalargepublicdebtmaybeacauseforconcernWhyimplicitliabilitiesofthegovernmentarealsoacauseforconcernGovernmentSpendingandTaxRevenueforSomeHigh-IncomeCountriesin2006SourcesofTaxRevenueintheU.S.,2007GovernmentSpendingintheU.S.,2007Socialinsuranceprogramsaregovernmentprogramsintendedtoprotectfamiliesagainsteconomichardship.TheGovernmentBudgetandTotalSpendingFiscalpolicyistheuseoftaxes,governmenttransfers,orgovernmentpurchasesofgoodsandservicestoshifttheaggregatedemandcurve.InvestmentTaxCreditsAninvestmenttaxcreditisataxbreakgiventofirmsbasedontheirinvestmentspending.Thisincreasestheincentiveforinvestmentspending.Investmenttaxcreditsareoftentemporary,applyingonlytoinvestmentspendingwithinaspecificperiod.Likedepartmentstoresalesthatencourageshopperstospendalotwhilethesaleison,temporaryinvestmenttaxcreditstendtogeneratealotofinvestmentspendingwhenthey’reineffect.Evenifafirmdoesn’tthinkitwillneedanewcomputerserverorlatheforanotheryearorso,itmaymakesensetobuyitwhilethetaxcreditisavailable,ratherthanwait.ExpansionaryandContractionaryFiscalPolicyExpansionaryFiscalPolicyCanCloseaRecessionaryGapExpansionaryfiscalpolicyincreasesaggregatedemand.RecessionarygapExpansionaryandContractionaryFiscalPolicyContractionaryFiscalPolicyCanEliminateanInflationaryGapContractionaryfiscalpolicyreducesaggregatedemand.InflationarygapACautionaryNote:LagsinFiscalPolicyInthecaseoffiscalpolicy,thereisanimportantreasonforcaution:therearesignificantlags

initsuse.Realizetherecessionary/inflationarygapbycollectingandanalyzingeconomicdatatakestimeGovernmentdevelopsaspendingplantakestimeImplementationoftheactionplan(spendingthemoneytakestimeExpansionaryFiscalPolicyinJapanJapanturnedtoexpansionaryfiscalpolicyintheearly1990s.Attheendofthe1980sJapan’sbubbleburst—stockandlandvaluesplunged.Duringtheyearsthatfollowed,Japanreliedonlarge-scalegovernmentpurchasesofgoodsandservices,mainlyintheformofconstructionspendingoninfrastructure,topropupaggregatedemand.Thisspendingwasscaledbackafter2000,butatitspeakitwastrulyimpressive.In1996Japanspentabout$300billiononinfrastructure.ExpansionaryFiscalPolicyinJapanWasthispolicyasuccess?Yesandno.Manyeconomistsbelievethatwithoutallthatgovernmentspending,theJapaneseeconomywouldhaveslidintoa1930s-typedepressionaftertheburstingofthebubbleeconomy.Instead,theeconomysufferedaslowdownbutnotasevereslump.FiscalPolicyandtheMultiplierFiscalpolicyhasamultipliereffectontheeconomy.ExpansionaryfiscalpolicyleadstoanincreaseinrealGDPlargerthantheinitialriseinaggregatespendingcausedbythepolicy.Conversely,contractionaryfiscalpolicyleadstoafallinrealGDPlargerthantheinitialreductioninaggregatespendingcausedbythepolicy.FiscalPolicyandtheMultiplierThesizeoftheshiftoftheaggregatedemandcurvedependsonthetypeoffiscalpolicy.Themultiplieronchangesingovernmentpurchases,1/(1?MPC),islargerthanthemultiplieronchangesintaxesortransfers,MPC/(1?MPC),becausepartofanychangeintaxesortransfersisabsorbedbysavings.Changesingovernmentpurchaseshaveamorepowerfuleffectontheeconomythanequal-sizedchangesintaxesortransfers.

FiscalPolicyandtheMultiplierFiscalPolicyandtheMultiplierMultiplierEffectsofChangesinTaxesandGovernmentTransfersEx:Thegovernmenthandsout$50billionintheformoftaxcuts.Thereisnodirecteffectonaggregatedemandbygovernmentpurchasesofgoodsandservices;GDPgoesuponlybecausehouseholdsspendsomeofthat$50billion.Howmuchwilltheyspend?MPC×$50billion.Forexample,ifMPC=0.6,thefirst-roundincreaseinconsumerspendingwillbe$30billion(0.6×$50billion=$30billion).ThisinitialriseinconsumerspendingwillleadtoaseriesofsubsequentroundsinwhichrealGDP,disposableincome,andconsumerspendingrisefurther.MultiplierEffectsofChangesinTaxesandGovernmentTransfersHypotheticalEffectsofaFiscalPolicywithMultiplierof2MultiplierEffectsofChangesinTaxesandGovernmentTransfersLump-sumtaxesaretaxesthatdon’tdependonthetaxpayer’sincome.HowTaxesAffecttheMultiplierRulesgoverningtaxesandsometransfersactasautomaticstabilizers,reducingthesizeofthemultiplierandautomaticallyreducingthesizeoffluctuationsinthebusinesscycle.Incontrast,discretionaryfiscalpolicyarisesfromdeliberateactionsbypolicymakersratherthanfromthebusinesscycle.AboutThatStimulusPackage...Inearly2008therewasbroadbipartisanagreementthattheU.S.economyneededafiscalstimulus.Therewas,however,sharppartisandisagreementaboutwhatformthatstimulusshouldtake.Republicansfavoredtaxcutsongeneralpoliticalprinciples.Democrats,bycontrast,preferredtransferpayments,especiallyincreasedunemploymentbenefitsandexpandedfoodstampaid.Theeventualcompromisegavemosttaxpayersaflat$600rebate,$1,200formarriedcouples.Howwelldesignedwasthestimulusplan?Manyeconomistsbelievedthatonlyafractionoftherebatecheckswouldactuallybespent,sothattheeventualmultiplierwouldbefairlylow.DifferencesintheEffectofExpansionaryFiscalPoliciesTheBudgetBalanceHowdosurplusesanddeficitsfitintotheanalysisoffiscalpolicy?Aredeficitseveragoodthingandsurplusesabadthing?TheBudgetBalanceOtherthingsequal,discretionaryexpansionaryfiscalpolicies—increasedgovernmentpurchasesofgoodsandservices,highergovernmenttransfers,orlowertaxes—reducethebudgetbalanceforthatyear.TheBudgetBalanceThatis,expansionaryfiscalpoliciesmakeabudgetsurplussmallerorabudgetdeficitbigger.Conversely,contractionaryfiscal

policies—smallergovernmentpurchasesofgoodsandservices,smallergovernmenttransfers,orhighertaxes—increasethebudgetbalanceforthatyear,makingabudgetsurplusbiggerorabudgetdeficitsmaller.TheBudgetBalanceSomeofthefluctuationsinthebudgetbalanceareduetotheeffectsofthebusinesscycle.Inordertoseparatetheeffectsofthebusinesscyclefromtheeffectsofdiscretionaryfiscalpolicy,governmentsestimatethecyclicallyadjustedbudgetbalance,anestimateofthebudgetbalanceiftheeconomywereatpotentialoutput.TheBudgetBalanceThebudgetdeficitasapercentageofGDPtendstoriseduringrecessions(indicatedbyshadedareas)andfallduringexpansions.TheBudgetBalanceThebudgetdeficitasapercentageofGDPmovescloselyintandemwiththeunemploymentrate.TheBudgetBalanceShouldtheBudgetBeBalanced?Mosteconomistsdon’tbelievethegovernmentshouldbeforcedtorunabalancedbudgeteveryyearbecausethiswouldunderminetheroleoftaxesandtransfersasautomaticstabilizers.Yetpolicymakersconcernedaboutexcessivedeficitssometimesfeelthatrigidrulesprohibiting—oratleastsettinganupperlimiton—deficitsarenecessary.StabilityPact—orStupidityPact?In1999agroupofEuropeannationsadoptedacommoncurrency,theeuro,toreplacetheirnationalcurrencies.GovernmentsofmembercountriessignedontotheEuropean“stabilitypact.”Thisagreementrequiredeachgovernmenttokeepitsbudgetdeficitbelow3%ofthecountry’sGDPorfacefines.Thestabilitypact,however,limitedacountry’sabilitytousefiscalpolicy.In2002bothFranceandGermanywereexperiencingrisingunemploymentandalsorunningbudgetdeficitsinexcessof3%ofGDP.InMarch2005thestabilitypactwasrewrittentoallow“smallandtemporary”breachesofthe3%limit.Long-RunImplicationsofFiscalPolicyU.S.governmentbudgetaccountingiscalculatedonthebasisoffiscalyears.AfiscalyearrunsfromOctober1toSeptember30andislabeledaccordingtothecalendaryearinwhichitends.Persistentbudgetdeficitshavelong-runconsequencesbecausetheyleadtoanincreaseinpublicdebt.DeficitsVersusDebtAdeficitisthedifferencebetweentheamountofmoneyagovernmentspendsandtheamountitreceivesintaxesoveragivenperiod.Adebtisthesumofmoneyagovernmentowesataparticularpointintime.Deficitsanddebtarelinked,becausegovernmentdebtgrowswhengovernmentsrundeficits.Buttheyaren’tthesamething,andtheycaneventelldifferentstories.Forexample,attheendoffiscal2008,U.S.debtasapercentageofGDPwasfairlylowbyhistoricalstandards,butthedeficitduringfiscal2008wasconsideredquitehigh.ProblemsPosedbyRisingGovernmentDebtPublicdebtmaycrowdoutinvestmentspending,whichreduceslong-runeconomicgrowth.Andinextremecases,risingdebtmayleadtogovernmentdefault,resultingineconomicandfinancialturmoil.Can’tagovernmentthathastroubleborrowingjustprintmoneytopayitsbills?Yes,itcan,butthisleadstoanotherproblem:inflation.TheAmericanWayofDebtDeficitsandDebtinPracticeAwidelyusedmeasureoffiscalhealthisthedebt–GDPratio.ThisnumbercanremainstableorfalleveninthefaceofmoderatebudgetdeficitsifGDPrisesovertime.U.S.FederalDeficitsandDebtU.S.FederalDeficitsandDebtJapaneseDeficitsandDebtJapaneseDeficitsandDebtWhatHappenedtotheDebtfromWorldWarII?ThegovernmentpaidforWorldWarIIbyborrowingonahugescale.Bythewar’send,thepublicdebtwasmorethan100%ofGDP,andmanypeopleworriedabouthowitcouldeverbepaidoff.Thetruthisthatitneverwaspaidoff.In1946publicdebtwas$242billion.By1962thepublicdebtwasbackupto$248billion.BythennobodywasworriedaboutthefiscalhealthoftheU.S.governmentbecausethedebt–GDPratiohadfallenbymorethanhalf.Vigorouseconomicgrowth,plusmildinflation,hadledtoarapidriseinGDP.Theexperiencewasaclearlessoninthepeculiarfactthatmoderngovernmentscanrundeficitsforever,aslongastheyaren’ttoolarge.ImplicitLiabilitiesImplicitliabilitiesarespendingpromisesmadebygovernmentsthatareeffectivelyadebtdespitethefactthattheyarenotincludedintheusualdebtstatistics.FutureDemandsontheFederalBudgetTheImplicitLiabilitiesoftheU.S.GovernmentArgentina’sCreditorsTakeaHaircutDuringmuchofthe1990s,Argentinawasexperiencinganeconomicboomandthegovernmentwaseasilyabletoborrowmoneyfromabroad.However,thecountryslidintoaneconomicslump.By2001,thecountrywascaughtinaviciouscircle:tocoveritsdeficitsandpayoffoldloansastheycamedue,itwasforcedtoborrowatmuchhigherinterestrates.IttookthreeyearsforArgentinatoreachanagreementwithitscreditors.Argentinaforceditscreditorstotradetheir“sovereignbonds”—debtsofasovereignnation—fornewbondsworthonly32%asmuch.Suchareductioninthevalueofdebtisknownasa“haircut.”1.

Thegovernmentplaysalargeroleintheeconomy,collectingalargeshareofGDPintaxesandspendingalargesharebothtopurchasegoodsandservicesandtomaketransferpayments,largelyforsocialinsurance.Fiscalpolicyistheuseoftaxes,governmenttransfers,orgovernmentpurchasesofgoodsandservicestoshifttheaggregatedemandcurve.Butmanyeconomistscautionthataveryactivefiscalpolicymayinfactmaketheeconomylessstableduetotimelagsinpolicyformulationandimplementation.2.

Governmentpurchasesofgoodsandservicesdirectlyaffectaggregatedemand,andchangesintaxesandgovernmenttransfersaffectaggregatedemandindirectlybychanginghouseholds’disposableincome.Expansionaryfiscalpolicyshiftstheaggregatedemandcurverightward;contractionaryfiscalpolicyshiftstheaggregatedemandcurveleftward.3.

Fiscalpolicyhasamultipliereffectontheeconomy,thesizeofwhichdependsuponthefiscalpolicy.Exceptinthecaseoflump-sumtaxes,taxesreducethesizeofthemultiplier.ExpansionaryfiscalpolicyleadstoanincreaseinrealGDP,whilecontractionaryfiscalpolicyleadstoareductioninrealGDP.Becausepartofanychangeintaxesortransfersisabsorbedbysavingsinthefirstroundofspending,changesingovernmentpurchasesofgoodsandserviceshaveamorepowerfuleffectontheeconomythanequal-sizechangesintaxesortransfers.4.

Rulesgoverningtaxes—withtheexceptionoflump-sumtaxes—andsometransfersactasautomaticstabilizers,reducingthesizeofthemultiplierandautomaticallyreducingthesizeoffluctuationsinthebusinesscycle.Incontrast,discretionary