文档介绍：Chapter 7
Macroeconomic Policies
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Topics to be Discussed
Fiscal policies and effects
ary policies and effects
Policy mix
Economic fluctuation and eliminating the fluctuations with economic policies
Macroeconomic policy practice
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Fiscal Policy and Effects
Concept of fiscal policy
Fiscal policy is the macroeconomic policy that the government implements by adjusting the aggregate demand to control unemployment, inflation and to realize economic growth and the balance of international payments.
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Fiscal Policy and Effects
Instruments
Government purchase
Government transfer
Taxation
Government bond
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Automatic stabilizer
Also named interior stabilizer. It’s a kind of mechanism existing in economic system which can counteract the effects of shocks on output.
Fiscal Policy and Effect
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Fiscal Policy and Effects
Automatic Stabilizer
In depression :
Y TR↑ C ↑ AE↑ Y ↑
In flourish:
Y ↑ T ↑ C AE Y ↑
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Fiscal Policy and Effects
Developing Stages of Western Fiscal Policies
1936 ~ 1945: anti-depression, simple and inflationary fiscal policy
1945 ~ 1961:anti-business-cycle pensative fiscal policy
1961 ~ 1979: fiscal policies with full employment budget
1981 ~ 1991:fiscal policies of supply-side school
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Fiscal Policy and Effects
Annual Balance Budget
Cyclical Balance Budget
Full-employment Balance Budget
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R
LM
IS1
Y
Y1
R1
A
IS2
B
R2
Y2
R
LM
IS1
Y
Y1
R1
A
IS2
B
R2
Y2
Total tax↑, IS shifts to the left
Tax rate↑, IS es more steep
Fiscal policy:IS curve shifts
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Crowding-out Effect
Pro-economic fiscal policy will lead to a increase in interest rate and personal investment is crowded out.
G↑ AE ↑ AE > Y Y ↑
Y↑ Md ↑ Md > Ms R ↑
R ↑ I
Fiscal Policy and Effects
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