- The document examines whether a government should intervene fiscally during a recession caused by an upward shift in the rate of time preference (RTP).
- When the RTP increases, the steady state of the economy shifts downward, requiring households to adjust their consumption path. However, households will not "jump" consumption to the new efficient path due to risk aversion and wanting smooth consumption over time.
- This results in households choosing a "Nash equilibrium of a Pareto inefficient path" rather than the efficient path, leading to increased unemployment during the recession. The document evaluates whether the government should intervene through increasing spending, cutting taxes, or not intervening at all.
This chapter introduces three basic macroeconomic relationships: 1) the income-consumption and income-saving relationships, 2) the relationship between the interest rate and investment, and 3) the multiplier concept relating changes in spending to changes in output. It provides details on consumption and saving schedules, average and marginal propensities to consume and save, and how nonincome factors can shift these schedules. It also discusses how the expected rate of return and real interest rate determine an investment demand curve.
This chapter discusses debates around stabilization policy. It considers whether policy should be active or passive in response to economic fluctuations, and whether policy should be set by rule or allow discretion. Arguments for active policy include reducing economic hardship, while arguments for passive policy cite lags in policy effects. Rules are argued to increase credibility and avoid time inconsistency, while discretion allows flexibility. Overall there is no clear consensus from history on the best approach.
Assignment of Macroeconomic Consumption Function
Consumption Function: Average Propensity to Consume and Marginal Propensity to Consume
Graphical Measurement of APC and MPC:
The document discusses the consumption function, which states that when income increases, consumption increases as well, but to a lesser degree. It defines key terms like marginal propensity to consume, average propensity to consume, and explains the relationship between income and consumption using graphs and tables. The consumption function assumes stable economic conditions and consumer preferences, but may not apply during times of economic instability.
The document discusses the consumption function, which models the relationship between total consumption and national income. Consumption is defined as an increasing function of income. The average propensity to consume (APC) is the ratio of consumption to income and declines as income rises. The marginal propensity to consume (MPC) is the change in consumption from a change in income and is assumed to be positive but less than 1. Keynes' psychological law of consumption states that consumption increases less than proportionately to increases in income. Determinants of consumption include subjective psychological factors as well as objective factors like wages, fiscal policy, and interest rates. Theories like Duesenberry's relative income hypothesis model consumption as interdependent and influenced by social
The document discusses different types of unemployment and factors that influence unemployment rates. It defines the natural rate of unemployment as the rate toward which the economy gravitates in the long run. The natural rate depends on the rates of job separation and job finding. Policies aimed at lowering the natural rate should reduce separation rates or increase finding rates. Different types of unemployment discussed include frictional unemployment from search time or sectoral shifts, structural unemployment from wage rigidity, and unemployment influenced by factors like unions, minimum wages, and efficiency wages.
There is now broad consensus among macroeconomists on key issues:
1) Monetary policy can be used to reduce economic instability by shifting the aggregate demand curve, except in a liquidity trap.
2) Fiscal and monetary policy can limit but not reduce unemployment below the natural rate.
3) Discretionary fiscal policy should be used sparingly due to lags and risk of political business cycles, while monetary policy plays the main stabilization role.
This chapter introduces three basic macroeconomic relationships: 1) the income-consumption and income-saving relationships, 2) the relationship between the interest rate and investment, and 3) the multiplier concept relating changes in spending to changes in output. It provides details on consumption and saving schedules, average and marginal propensities to consume and save, and how nonincome factors can shift these schedules. It also discusses how the expected rate of return and real interest rate determine an investment demand curve.
This chapter discusses debates around stabilization policy. It considers whether policy should be active or passive in response to economic fluctuations, and whether policy should be set by rule or allow discretion. Arguments for active policy include reducing economic hardship, while arguments for passive policy cite lags in policy effects. Rules are argued to increase credibility and avoid time inconsistency, while discretion allows flexibility. Overall there is no clear consensus from history on the best approach.
Assignment of Macroeconomic Consumption Function
Consumption Function: Average Propensity to Consume and Marginal Propensity to Consume
Graphical Measurement of APC and MPC:
The document discusses the consumption function, which states that when income increases, consumption increases as well, but to a lesser degree. It defines key terms like marginal propensity to consume, average propensity to consume, and explains the relationship between income and consumption using graphs and tables. The consumption function assumes stable economic conditions and consumer preferences, but may not apply during times of economic instability.
The document discusses the consumption function, which models the relationship between total consumption and national income. Consumption is defined as an increasing function of income. The average propensity to consume (APC) is the ratio of consumption to income and declines as income rises. The marginal propensity to consume (MPC) is the change in consumption from a change in income and is assumed to be positive but less than 1. Keynes' psychological law of consumption states that consumption increases less than proportionately to increases in income. Determinants of consumption include subjective psychological factors as well as objective factors like wages, fiscal policy, and interest rates. Theories like Duesenberry's relative income hypothesis model consumption as interdependent and influenced by social
The document discusses different types of unemployment and factors that influence unemployment rates. It defines the natural rate of unemployment as the rate toward which the economy gravitates in the long run. The natural rate depends on the rates of job separation and job finding. Policies aimed at lowering the natural rate should reduce separation rates or increase finding rates. Different types of unemployment discussed include frictional unemployment from search time or sectoral shifts, structural unemployment from wage rigidity, and unemployment influenced by factors like unions, minimum wages, and efficiency wages.
There is now broad consensus among macroeconomists on key issues:
1) Monetary policy can be used to reduce economic instability by shifting the aggregate demand curve, except in a liquidity trap.
2) Fiscal and monetary policy can limit but not reduce unemployment below the natural rate.
3) Discretionary fiscal policy should be used sparingly due to lags and risk of political business cycles, while monetary policy plays the main stabilization role.
This document provides definitions and diagrams related to macroeconomics concepts including:
- Definitions of macroeconomics, national income, GDP, GNP, real GDP
- Circular flow diagrams showing flows between households, firms, government
- Components of aggregate demand and supply
- Causes of shifts in aggregate demand and short-run aggregate supply
- Business cycles and use of diagrams to illustrate macroeconomic goals
- Unemployment, inflation, and Phillips curve concepts
- Monetary and fiscal policy approaches and their strengths/weaknesses
This chapter introduces the IS-LM model, which combines the Keynesian Cross model and the liquidity preference theory to determine equilibrium income and interest rates in the short run when prices are fixed. The IS curve shows all combinations of income and interest rates that result in goods market equilibrium based on the Keynesian Cross. The LM curve shows combinations that result in money market equilibrium based on liquidity preference theory. Where the IS and LM curves intersect indicates the short-run equilibrium levels of income and interest rates. Fiscal and monetary policies can shift the IS and LM curves to influence equilibrium.
This presentation summarizes Philip's curve and Okun's law. It discusses how Philip's curve shows the relationship between unemployment and inflation in an economy based on data from the UK. It also explains how Okun's law describes a negative relationship between GDP and unemployment, with the economy experiencing a 1 percentage point rise in unemployment for every 3 percentage point decrease in GDP. Graphs are presented analyzing the relationships between GDP and unemployment from 1980-2012 and between inflation and unemployment from 1980-2012 in the UK.
The document summarizes three models of aggregate supply and the relationship between inflation and unemployment known as the Phillips curve. The models are the sticky-wage, imperfect-information, and sticky-price models. It also discusses how expectations are formed, the short-run tradeoff in the Phillips curve, and the costs of reducing inflation through contractionary policy.
This document discusses the consumption function in economics. It defines key terms like income, disposable income, autonomous consumption, induced consumption, marginal propensity to consume, and average propensity to consume. It explains that consumption is primarily a function of disposable income and can be modeled as C = Y*MPC in the long run or C = ca + Y*MPC in the short run, where MPC is the slope of the consumption line. It also outlines Keynes' law of consumption, which states that increases in income lead to increases in both consumption and savings.
1. The IS-LM model shows macroeconomic equilibrium through the intersection of the investment-savings (IS) curve and the liquidity-money (LM) curve.
2. Fiscal and monetary policy can shift the IS and LM curves, impacting equilibrium income and interest rates. Expansionary fiscal policy shifts IS right, while contractionary shifts it left. Expansionary monetary policy shifts LM right, while contractionary shifts it left.
3. The effectiveness of fiscal and monetary policy can be undermined by crowding out or a liquidity trap. When money demand is very sensitive to interest rates, fiscal policy expansion may be offset by rising rates. Monetary policy is ineffective in a liquidity trap
This document provides an overview of the dynamic AD-AS macroeconomic model. It describes the key components of the model - the Solow curve, which shows potential GDP growth based on productivity and supply factors; the Aggregate Demand curve, which plots inflation and GDP combinations consistent with a given money supply and velocity of money; and the Short-Run Aggregate Supply curve, which shows the relationship between inflation and GDP due to price adjustment dynamics. The document uses the model to analyze the effects of changes in money supply, confidence, productivity, and policy tools on inflation and GDP growth. It explains that while monetary and fiscal policy can boost demand in the short-run, they cannot increase GDP permanently above potential in response to a negative
Expectations and Economics policy by Zegeye Paulos Borko (Asst,...Zegeye Paulos
Expectationa and Economics policy
-What do we mean by the Rational Expectations Hypothesis [REH].
-What are the implications of the REH for the conduct of economic policy?
-The “Policy-Ineffectiveness Proposition” [PIP]
-What are the implications of the REH for economicmodeling? The “Lucas critique”
The document provides an overview of the Phillips curve, which shows the relationship between unemployment and inflation. It discusses the history of the Phillips curve developed by A.W. Phillips and debates around the short-run versus long-run curve. It also examines different types of inflation (cost-push, demand-pull) and unemployment (natural, structural, frictional, cyclical). Finally, it analyzes the relationship between inflation and unemployment and how policies aimed at reducing one may impact the other.
The document discusses whether the US economy has truly recovered from the Great Recession. While GDP and corporate profits have increased since the recession, the author argues that the quality of life for most Americans, especially the bottom 99%, has not significantly improved or has deteriorated. Unemployment rates only consider those actively looking for work and do not account for discouraged workers, and labor participation is at a 38-year low. The author believes inequality has increased and many Americans remain unemployed or underemployed, indicating the economy has not fully recovered for most.
The Philip curve shows an inverse relationship between the rate of unemployment and the rate of change in money wages in the short run. Friedman argued that in the long run, there is no tradeoff between inflation and unemployment - the Philip curve becomes vertical at the natural rate of unemployment, which is the rate where expected and actual inflation are equal. Temporary reductions in unemployment below the natural rate are only possible if inflation rises above expectations, but eventually expectations will adjust and unemployment will return to the natural rate, even as inflation accelerates.
A Study of Short-run Consumption Function and its Modification with Some Spec...iosrjce
Consumption function shows the relationship between a nation’s income and consumption and it is
imperative in macroeconomics. The present study is causal in nature. The study is based on secondary data
sources especially absolute income theory of consumption under the Keynes’s short-run consumption function
and psychological law of consumption. This paper is an endeavor to study the Keynes’s short-run consumption
function (SCFk) with some special assumptions that SCFk
is misleading to formulate the macroeconomic
policies. This study has developed a modified short-run consumption function (SCFm) with some special
assumptions. The SCFm shows that total consumption is lower than the total consumption by SCFk
. So, the
saving derived from SCFm is higher than the saving derived from SCFk
. This study constructs that under some
special assumption, SCFm helps to calculate the exact amount of consumption, saving, investment to formulate
macroeconomic policy (policies) properly which has great impact in macroeconomics.
Macro Economics -II Chapter Two AGGREGATE SUPPLYZegeye Paulos
1) The document discusses four models of short-run aggregate supply: the sticky-price model, imperfect information model, and sticky-wage model.
2) In the sticky-price model, some prices are fixed in the short-run due to contracts or costs of changing prices. This can cause output to deviate from natural levels when demand changes.
3) The imperfect information model assumes suppliers don't know the overall price level when making decisions. Output will rise if actual prices are above expected prices.
4) In the sticky-wage model, nominal wages are fixed by contracts in the short-run. A price rise will lower real wages and induce firms to hire more workers and produce more output
Consumption and investment are the two components of aggregate demand in a simple two-sector macroeconomic model that assumes no government or foreign trade. Consumption is determined by disposable income and other factors, while savings is the portion of disposable income not consumed. The marginal propensity to consume measures how consumption changes with income, and is between 0 and 1. Determinants of consumption and savings include income, interest rates, prices, wealth, and demographic factors.
- The short-run Phillips curve shows an inverse relationship between unemployment and inflation in the short term, but this disappears in the long run.
- Milton Friedman argued that in the long run, inflation is dependent on expected inflation rather than actual unemployment. The long-run Phillips curve is vertical at the natural rate of unemployment.
- Differences between expected and actual inflation can cause temporary deviations from the natural rate of unemployment in the short run, but inflation expectations eventually adjust, and unemployment returns to the natural rate in the long run.
Fundamentals Of Aggregate Demand And Aggregate SupplySaurabh Goel
The document summarizes the aggregate demand and supply model, which studies output and price level determination. It outlines the determinants and properties of aggregate demand and supply curves. Specifically, it discusses how fiscal and monetary policies can cause shifts in the aggregate demand curve, and how aggregate supply behaves in the short-run versus long-run.
The document discusses key concepts related to consumption functions, including:
1) Consumption depends mainly on current income but is also influenced by other factors like interest rates and wealth. As income rises, consumption increases at a lower rate due to savings.
2) Average Propensity to Consume (APC) and Marginal Propensity to Consume (MPC) measure the relationship between consumption and income. APC is the ratio of total consumption to total income, while MPC is the change in consumption over a change in income.
3) Effective demand, the combination of consumption and investment demand, must remain high to maintain employment levels. Investment demand depends on the marginal efficiency of capital (MEC).
The document discusses different economic theories related to taxation and government policies, including supply-side economics, the Laffer curve, and Reaganomics. It provides context on theories of the relationship between taxation rates and government revenue, and debates around using tax policy to influence economic growth. Historical examples from the Nixon and Reagan administrations regarding wage and price controls and tax cuts are analyzed in light of these economic concepts.
1. The document outlines a framework for analyzing macroeconomic problems using basic macroeconomic models.
2. It describes the typical components of analysis: a starting point, a pivotal event that causes change, and secondary and long-run effects of that event.
3. The analysis uses macroeconomic models like aggregate demand and aggregate supply to evaluate how various factors can shift curves and affect output and inflation in both the short-run and long-run.
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
The document discusses discretionary fiscal policy during recessions caused by fundamental shocks that lower the steady state level of production and consumption. It argues that households, being risk averse and non-cooperative, will not "jump" their consumption to the new efficient path but instead follow a Pareto inefficient path with continuously falling consumption. The best policy option in this scenario is for the government to increase consumption through fiscal policy until demand meets current production levels, maintaining this for a long period. This will lead to large government debts but they can be sustained if taxes are appropriately increased in the future.
This document discusses whether governments should intervene fiscally during recessions and how. It analyzes a recession caused by an upward shift in the rate of time preference (RTP), which changes the steady state downward. Households would normally "jump" consumption to the new steady state path to maintain efficiency, but they prefer smooth consumption. As a result, they choose an inefficient path with high unemployment. The government has three options: do nothing, increase spending, or cut taxes. Increasing spending to match demand with current production for a long period is argued to be the best approach, despite large accumulating debts that can be sustained through future tax increases.
This document provides definitions and diagrams related to macroeconomics concepts including:
- Definitions of macroeconomics, national income, GDP, GNP, real GDP
- Circular flow diagrams showing flows between households, firms, government
- Components of aggregate demand and supply
- Causes of shifts in aggregate demand and short-run aggregate supply
- Business cycles and use of diagrams to illustrate macroeconomic goals
- Unemployment, inflation, and Phillips curve concepts
- Monetary and fiscal policy approaches and their strengths/weaknesses
This chapter introduces the IS-LM model, which combines the Keynesian Cross model and the liquidity preference theory to determine equilibrium income and interest rates in the short run when prices are fixed. The IS curve shows all combinations of income and interest rates that result in goods market equilibrium based on the Keynesian Cross. The LM curve shows combinations that result in money market equilibrium based on liquidity preference theory. Where the IS and LM curves intersect indicates the short-run equilibrium levels of income and interest rates. Fiscal and monetary policies can shift the IS and LM curves to influence equilibrium.
This presentation summarizes Philip's curve and Okun's law. It discusses how Philip's curve shows the relationship between unemployment and inflation in an economy based on data from the UK. It also explains how Okun's law describes a negative relationship between GDP and unemployment, with the economy experiencing a 1 percentage point rise in unemployment for every 3 percentage point decrease in GDP. Graphs are presented analyzing the relationships between GDP and unemployment from 1980-2012 and between inflation and unemployment from 1980-2012 in the UK.
The document summarizes three models of aggregate supply and the relationship between inflation and unemployment known as the Phillips curve. The models are the sticky-wage, imperfect-information, and sticky-price models. It also discusses how expectations are formed, the short-run tradeoff in the Phillips curve, and the costs of reducing inflation through contractionary policy.
This document discusses the consumption function in economics. It defines key terms like income, disposable income, autonomous consumption, induced consumption, marginal propensity to consume, and average propensity to consume. It explains that consumption is primarily a function of disposable income and can be modeled as C = Y*MPC in the long run or C = ca + Y*MPC in the short run, where MPC is the slope of the consumption line. It also outlines Keynes' law of consumption, which states that increases in income lead to increases in both consumption and savings.
1. The IS-LM model shows macroeconomic equilibrium through the intersection of the investment-savings (IS) curve and the liquidity-money (LM) curve.
2. Fiscal and monetary policy can shift the IS and LM curves, impacting equilibrium income and interest rates. Expansionary fiscal policy shifts IS right, while contractionary shifts it left. Expansionary monetary policy shifts LM right, while contractionary shifts it left.
3. The effectiveness of fiscal and monetary policy can be undermined by crowding out or a liquidity trap. When money demand is very sensitive to interest rates, fiscal policy expansion may be offset by rising rates. Monetary policy is ineffective in a liquidity trap
This document provides an overview of the dynamic AD-AS macroeconomic model. It describes the key components of the model - the Solow curve, which shows potential GDP growth based on productivity and supply factors; the Aggregate Demand curve, which plots inflation and GDP combinations consistent with a given money supply and velocity of money; and the Short-Run Aggregate Supply curve, which shows the relationship between inflation and GDP due to price adjustment dynamics. The document uses the model to analyze the effects of changes in money supply, confidence, productivity, and policy tools on inflation and GDP growth. It explains that while monetary and fiscal policy can boost demand in the short-run, they cannot increase GDP permanently above potential in response to a negative
Expectations and Economics policy by Zegeye Paulos Borko (Asst,...Zegeye Paulos
Expectationa and Economics policy
-What do we mean by the Rational Expectations Hypothesis [REH].
-What are the implications of the REH for the conduct of economic policy?
-The “Policy-Ineffectiveness Proposition” [PIP]
-What are the implications of the REH for economicmodeling? The “Lucas critique”
The document provides an overview of the Phillips curve, which shows the relationship between unemployment and inflation. It discusses the history of the Phillips curve developed by A.W. Phillips and debates around the short-run versus long-run curve. It also examines different types of inflation (cost-push, demand-pull) and unemployment (natural, structural, frictional, cyclical). Finally, it analyzes the relationship between inflation and unemployment and how policies aimed at reducing one may impact the other.
The document discusses whether the US economy has truly recovered from the Great Recession. While GDP and corporate profits have increased since the recession, the author argues that the quality of life for most Americans, especially the bottom 99%, has not significantly improved or has deteriorated. Unemployment rates only consider those actively looking for work and do not account for discouraged workers, and labor participation is at a 38-year low. The author believes inequality has increased and many Americans remain unemployed or underemployed, indicating the economy has not fully recovered for most.
The Philip curve shows an inverse relationship between the rate of unemployment and the rate of change in money wages in the short run. Friedman argued that in the long run, there is no tradeoff between inflation and unemployment - the Philip curve becomes vertical at the natural rate of unemployment, which is the rate where expected and actual inflation are equal. Temporary reductions in unemployment below the natural rate are only possible if inflation rises above expectations, but eventually expectations will adjust and unemployment will return to the natural rate, even as inflation accelerates.
A Study of Short-run Consumption Function and its Modification with Some Spec...iosrjce
Consumption function shows the relationship between a nation’s income and consumption and it is
imperative in macroeconomics. The present study is causal in nature. The study is based on secondary data
sources especially absolute income theory of consumption under the Keynes’s short-run consumption function
and psychological law of consumption. This paper is an endeavor to study the Keynes’s short-run consumption
function (SCFk) with some special assumptions that SCFk
is misleading to formulate the macroeconomic
policies. This study has developed a modified short-run consumption function (SCFm) with some special
assumptions. The SCFm shows that total consumption is lower than the total consumption by SCFk
. So, the
saving derived from SCFm is higher than the saving derived from SCFk
. This study constructs that under some
special assumption, SCFm helps to calculate the exact amount of consumption, saving, investment to formulate
macroeconomic policy (policies) properly which has great impact in macroeconomics.
Macro Economics -II Chapter Two AGGREGATE SUPPLYZegeye Paulos
1) The document discusses four models of short-run aggregate supply: the sticky-price model, imperfect information model, and sticky-wage model.
2) In the sticky-price model, some prices are fixed in the short-run due to contracts or costs of changing prices. This can cause output to deviate from natural levels when demand changes.
3) The imperfect information model assumes suppliers don't know the overall price level when making decisions. Output will rise if actual prices are above expected prices.
4) In the sticky-wage model, nominal wages are fixed by contracts in the short-run. A price rise will lower real wages and induce firms to hire more workers and produce more output
Consumption and investment are the two components of aggregate demand in a simple two-sector macroeconomic model that assumes no government or foreign trade. Consumption is determined by disposable income and other factors, while savings is the portion of disposable income not consumed. The marginal propensity to consume measures how consumption changes with income, and is between 0 and 1. Determinants of consumption and savings include income, interest rates, prices, wealth, and demographic factors.
- The short-run Phillips curve shows an inverse relationship between unemployment and inflation in the short term, but this disappears in the long run.
- Milton Friedman argued that in the long run, inflation is dependent on expected inflation rather than actual unemployment. The long-run Phillips curve is vertical at the natural rate of unemployment.
- Differences between expected and actual inflation can cause temporary deviations from the natural rate of unemployment in the short run, but inflation expectations eventually adjust, and unemployment returns to the natural rate in the long run.
Fundamentals Of Aggregate Demand And Aggregate SupplySaurabh Goel
The document summarizes the aggregate demand and supply model, which studies output and price level determination. It outlines the determinants and properties of aggregate demand and supply curves. Specifically, it discusses how fiscal and monetary policies can cause shifts in the aggregate demand curve, and how aggregate supply behaves in the short-run versus long-run.
The document discusses key concepts related to consumption functions, including:
1) Consumption depends mainly on current income but is also influenced by other factors like interest rates and wealth. As income rises, consumption increases at a lower rate due to savings.
2) Average Propensity to Consume (APC) and Marginal Propensity to Consume (MPC) measure the relationship between consumption and income. APC is the ratio of total consumption to total income, while MPC is the change in consumption over a change in income.
3) Effective demand, the combination of consumption and investment demand, must remain high to maintain employment levels. Investment demand depends on the marginal efficiency of capital (MEC).
The document discusses different economic theories related to taxation and government policies, including supply-side economics, the Laffer curve, and Reaganomics. It provides context on theories of the relationship between taxation rates and government revenue, and debates around using tax policy to influence economic growth. Historical examples from the Nixon and Reagan administrations regarding wage and price controls and tax cuts are analyzed in light of these economic concepts.
1. The document outlines a framework for analyzing macroeconomic problems using basic macroeconomic models.
2. It describes the typical components of analysis: a starting point, a pivotal event that causes change, and secondary and long-run effects of that event.
3. The analysis uses macroeconomic models like aggregate demand and aggregate supply to evaluate how various factors can shift curves and affect output and inflation in both the short-run and long-run.
What is happening to the Phillips Curve in the UK economy? is the trade-off between unemployment and inflation continuing to change favourably? Can the UK reach full-employment in this economic cycle?
The document discusses discretionary fiscal policy during recessions caused by fundamental shocks that lower the steady state level of production and consumption. It argues that households, being risk averse and non-cooperative, will not "jump" their consumption to the new efficient path but instead follow a Pareto inefficient path with continuously falling consumption. The best policy option in this scenario is for the government to increase consumption through fiscal policy until demand meets current production levels, maintaining this for a long period. This will lead to large government debts but they can be sustained if taxes are appropriately increased in the future.
This document discusses whether governments should intervene fiscally during recessions and how. It analyzes a recession caused by an upward shift in the rate of time preference (RTP), which changes the steady state downward. Households would normally "jump" consumption to the new steady state path to maintain efficiency, but they prefer smooth consumption. As a result, they choose an inefficient path with high unemployment. The government has three options: do nothing, increase spending, or cut taxes. Increasing spending to match demand with current production for a long period is argued to be the best approach, despite large accumulating debts that can be sustained through future tax increases.
Module 4 - SLPRESPONSIBILITY ACCOUNTING FOR COST, PROFIT AND INV.docxroushhsiu
Module 4 - SLP
RESPONSIBILITY ACCOUNTING FOR COST, PROFIT AND INVESTMENT CENTERS
The following data pertain to the operating revenues and expenses for California, Inc. for 20XX.
Los Angeles
(LA) Segment
San Francisco
(SF) Segment
Total
Sales
$180,000
$360,000
$540,000
Variable expenses
96,000
240,000
336,000
Direct fixed expenses
24,000
30,000
54,000
Indirect fixed expenses
72,000
Assets (investment) used to generate operating income for the two segments are shown below.
Los Angeles
Segment
San Francisco
Segment
Assets directly used by and identified with the segment
$180,000
$360,000
a. Prepare a segmented income statement in good format showing the contribution margin of each segment, the contribution to indirect expenses of each segment, and the total income of California, Inc.
b. Determine the return on investment for evaluating (1) the earning power of the entire company and (2) the performance of each segment.
c. Comment on the results of part (b).
SLP Assignment Expectations
Show computations in good format and explain answers as required. Excel is a great tool to make computations and present financial information in an easy to understand format. Write comments below the computations in Excel. Submit only the Excel file. Both content and the clarity of the presentation will be evaluated for grading purposes.
MPRA
Munich Personal RePEc Archive
Should a Government Fiscally Intervene
in a Recession and, If So, How?
Taiji Harashima
Kanazawa Seiryo University
2 April 2017
Online at https://mpra.ub.uni-muenchen.de/78053/
MPRA Paper No. 78053, posted 31 March 2017 09:03 UTC
http://mpra.ub.uni-muenchen.de/
https://mpra.ub.uni-muenchen.de/78053/
Should a Government Fiscally Intervene in a Recession and, If So, How?
Taiji HARASHIMA*
April, 2017
Abstract
The validity of discretionary fiscal policy in a recession will differ according to the cause and
mechanism of recession. In this paper, discretionary fiscal policy in a recession caused by a
fundamental shock that changes the steady state downwards is examined. In such a recession,
households need to discontinuously increase consumption to a point on the saddle path to
maintain Pareto efficiency. However, they will not “jump” consumption in this manner and
instead will choose a “Nash equilibrium of a Pareto inefficient path” because they dislike
unsmooth and discontinuous consumption and behave strategically. The paper concludes that
increasing government consumption until demand meets the present level of production and
maintaining this fiscal policy for a long period is the best option. Consequent government debts
can be sustainable even if they become extremely large.
JEL Classification code: E20, E32, E62, H20, H30, H63
Keywords: Discretionary Fiscal policy; Recession; Government consumption; Government
debts; Pareto inefficiency; Time preference
*Correspon ...
The document discusses the challenges facing Abenomics policies in Japan and examines the implications for economic welfare and wealth inequality. It establishes a framework to analyze Abenomics by comparing potential policy outcomes to those of Reaganomics and Thatcherism. Key uncertainties include external factors, asymmetrical risks, and whether policy commitments can be maintained. If implementation succeeds, growth could increase aggregate welfare but also potentially widen wealth gaps without redistributive policies.
The Causal Analysis of the Relationship between Inflation and Output Gap in T...inventionjournals
The purpose of the paper is to study dynamic relationships between the inflation and output gap by using Granger causality, Impulse response and variance decompositions analysis within VECM framework for the quarterly data over the first period of 2003 and second period of 2016. The results of the study indicate that the output gap Granger cause the inflation in Turkey both in short-and long-runs. Also, sign of the causality is negative and same causal relationships between two variables hold beyond the sample period. The results should be taken as an evidence of the conclusion that the output gap has important implications for the CBRT's monetary policy.
Why Macroeconomic Structural and Wage-Price Indicators are Puzzling the Polic...Economic Policy Dialogue
This commentary tries to answer the puzzling questions – why there is a disconnect between inflation and unemployment, unemployment rate and wage rate, monetary policy rate stance and real economy, economic buoyancy and price-wage indicators; and also, why the neutral interest rate and the natural unemployment rate are declining. It points out that the official data do not represent the structural realities of the economy. As the official measurements have been deviating more from the social and economic facts, the economic indicators have tended to become less predictable and applicable.
Inflation, Unemployment, and Stabilization Policies.pptmajidaghaei4
This document discusses fiscal and monetary policy and their effects on inflation, unemployment, and economic stabilization. It covers topics such as:
- How fiscal policy can be expansionary or contractionary through increasing or decreasing government spending and taxation.
- How fiscal policy affects aggregate demand and the budget balance.
- How monetary policy can be expansionary or contractionary through increasing or decreasing the money supply.
- The relationship between inflation, unemployment, and the output gap as depicted by the Phillips Curve.
- How expectations can cause shifts in the Phillips Curve in the long run.
MT IS-LM-AD-AS___Big Picture Summary with illustrations, explanations and lin...Ari Wibowo
This document provides an overview of different macroeconomic theories and models, including the IS-LM, AD-AS, and LRAS frameworks. It discusses the key differences between theories that assume aggregate supply is vertical (Classic view) versus upward-sloping (Keynesian view). It then demonstrates how the pandemic could be analyzed through each lens, with the Keynesian view suggesting impacts on output and employment but the Classic view suggesting only inflation effects. The document also considers alternative aggregate supply assumptions and implications for policy responses.
This document discusses the mathematics behind the Phillips curve and different monetary policy approaches. It summarizes an initial model of the Phillips curve that assumes expected inflation equals actual inflation and a constant monetary policy by the central bank. This initial model results in periodic behavior of unemployment and inflation. The document then introduces the idea of a variable monetary policy where the central bank adapts its policy based on unemployment and inflation levels. This makes the relationship between monetary policy and the Phillips curve nonlinear.
1. The document discusses the differences between the short run and long run in macroeconomics, with the short run being when prices do not change much and the long run being when prices have fully adjusted.
2. It explains how wage and price changes can move the economy from a recession or boom in the short run back to full employment in the long run through shifts along the aggregate supply curve.
3. The document also covers how monetary policy can be used to speed up the adjustment process but may lead to higher price levels.
The document analyzes whether the yield curve, the difference between long-term and short-term interest rates, can still predict U.S. economic activity. It finds that while the yield curve spread has historically predicted output growth and recessions, its predictive power has declined since the 1980s. Structural breakpoints are found around 1985 and 2008 when testing the linear regression model. However, the yield curve still retains its ability to predict recessions based on a probit model analyzing data from 1955 to 2014. The document reviews theories on how the yield curve spread can indicate future economic conditions and output growth.
This document summarizes a study analyzing the effects of increasing the Canada Pension Plan (CPP) contribution rate on the labor market. The study uses a macroeconomic model called FOCUS to forecast the response. The model predicts that a 1% increase in the CPP rate would lead to:
1) A decrease in real GDP, consumption, and investment over the next 5 years as workers' take-home pay is reduced.
2) Higher unemployment and lower real wages as employers adjust by hiring fewer workers and raising prices.
3) Potential inflation as employers pass costs to consumers, though monetary policy responses could dampen this effect.
The document discusses various concepts related to inflation including: the classical model of money and prices which states that increases in the money supply lead to equal percentage increases in prices; how governments can raise revenue through printing money which leads to inflation and imposes an "inflation tax"; and how hyperinflation can occur in a self-reinforcing cycle if a government prints too much money. It also covers moderate inflation, disinflation, the output gap, and the relationship between output and unemployment.
The Heterogenous Effects of Government Spending - by Axelle Ferriere and Gast...ADEMU_Project
- The paper examines how tax progressivity affects government spending multipliers using US data from 1913-2012.
- It finds that spending multipliers are positive only when spending is financed by more progressive taxes that place relatively more of the burden on high-income households. However, multipliers are negative when the tax burden falls more on low-income households.
- At the micro-level, spending has heterogeneous effects - it expands output for low-income households only when accompanied by more progressive taxes, but has no effect on high-income households.
DB2
7 Economic Policy Challenging Incrementalism
Incremental and Nonincremental Policymaking
Traditionally, fiscal and monetary policies were made incrementally; that is, decision makers concentrated their attention on modest changes—increases or decreases—in existing taxing, spending, and deficit levels, as well as the money supply and interest rates. Incrementalism was especially pervasive in annual federal budget making. The president and Congress did not reconsider the value of all existing programs each year, or pay much attention to previously established expenditure levels. Rather last year’s expenditures were considered as a base of spending for each program, attractive consideration of the budget proposals focused on new items or increases over last year’s base.
But crises often force policymakers to abandon incrementalism and reach out in non-incremental directions. In economic policy, the president and Congress and the Fed are pressured to “do something” in the face of a perceived economic crisis, even if there is little consensus on what should be done, or even whether there is anything the federal government can do to resolve the crisis. As we shall see later in this chapter, the recession that began in 2008 caused policymakers to search for new policies and make dramatic changes in spending and deficit levels and to undertake unprecedented measures to prevent the collapse of financial markets and avoid a deep recession.
Fiscal and Monetary Policy
Economic policy is exercised primarily through the federal government’s fiscal policies—decisions about taxing, spending, and deficit levels—and its monetary policies—decisions about the money supply and interest rates.
Fiscal policy is made in the annual preparation of the federal budget by the president and the Office of Management and Budget, and subsequently considered by Congress in its annual appropriations bills and revisions of the tax laws. These decisions determine overall federal spending levels, as well as spending priorities among federal programs. Together with tax policy decisions (see Chapter 8), these spending decisions determine the size of the federal government’s annual deficits or surpluses.
Monetary policy is the principal responsibility of the powerful and independent Federal Reserve Board—“the Fed”—which can expand or contract the money supply through its oversight of the nation’s banking system (see “The Fed at Work” later in this chapter). Congress established the Federal Reserve System and its governing Board in 1913 and Congress could, if it wished, reduce its power or even abolish the Fed altogether. But no serious effort has ever been undertaken to do so.
Economic Theories As Policy Guides
The goals of economic policy are widely shared: growth in economic output and standards of living, full and productive employment of the nation’s work force, and stable prices with low inflation. But a variety of economic theories compete for preeminence as ways of achiev.
This document discusses key concepts in managerial economics including business cycles, monetary policy, and costs. It provides the following information:
1) It describes the four phases of a typical business cycle: contraction, trough, expansion, and peak. The National Bureau of Economic Research determines the business cycle stages by analyzing economic indicators like GDP growth.
2) It defines monetary policy as the measures taken by central banks to manage money supply, interest rates, and credit conditions to achieve economic objectives. Common monetary policy tools include reserve requirements, interest rates, and open market operations.
3) It explains the difference between implicit costs (opportunity costs of using own resources) and explicit costs (direct payments) as well as
discussion 1There are essentially polar opposite view pointhuttenangela
discussion 1:
There are essentially polar opposite view points to the classical and Keynesian approach to macroeconomics. The largest, and most obvious, difference between these two conflicting points of view would be the ‘hands-on’ vs. ‘hands-off’ approach. Classical economists follow the ‘hands-off’, or laissez fair approach (Amacher, 2019). Keynesians would argue this is not a good idea because the economy clearly shows that, when left untouched, it can spiral in to terrible circumstances which call for a ‘hands-on’ approach. Another primary dispute between the two view points is how the economy adjusts during recession and finds its way back to full employment (CrushCourse, 2015). The classical point of view would lead us to believe the economy will correct itself over time. The Keynesian model asserts the economy can be stuck below its potential for too long of time (g whizziest, 2015). The Keynesians say wages and prices, although flexible, can get stuck and keep the economy well below its full employment potential (g whizziest, 2015). Sure, it might correct itself in the long run, but how long? As John Maynard Keynes' said, “
In the long run we are all dead.
”
For this discussion, I have been assigned to the classical point of view. I would support this economics philosophy for the following reason: classical economists believe the economy will experience ups and downs but will always return to full employment on its own. Even during a recession, the ‘price adjustment mechanism’ will right the economy (CrushCourse, 2015). This would mean that during a recession unemployment, prices, wages, and interest would fall (CrushCourse, 2015). However, this would also mean consumption, production, and investment should increase over time, which would eventually return the economy to full employment (CrushCourse, 2015).
In regard to the current U.S. economy, as a classical economist, I would take several measures to right the course. For starters, we would need to cut out all government involvement, or manipulation. All the government does is mess things up. Fire the Federal Reserve members. The economy does not need any sort of regulation. We will allow each market to regulate itself without rules imposed by the government. In the long run, any problem the U.S. economy might face will be corrected naturally.
Amacher, R., & Pate, J. (2019).
Principles of macroeconomics
(2nd ed.). Retrieved from https://content.ashford.edu/
CrushCourse. (2015, December 8).
Classical and Keynesian economics
. Links to an external site. [Video file]. Retrieved from https://www.youtube.zcom/watch?v=JOWiy3wbLvI
g whizziest. (2015, September 29).
The Keynesian model and the classical model
. Links to an external site. [Video file]. Retrieved from https://youtu.be/Xt_L8WFKvLc
discussion 2:
The model school that was picked for me to write about is classical economics.
Compare and contrast classical economics and ...
The theme we are dealing with in this article concerns economic planning, which is a very important issue for every society that wants to promote its economic and social development in an environment of high complexity and often chaotic changes, such as the one we live imposed by internal economic factors and also by external economic factors resulting from the country's participation in the global economy.
National Income, Strategic Discontinuity, and Converging Trajectories of Macr...Przegląd Politologiczny
The framework of converging trajectories of macroeconomic policy initiatives is employed
in the context of strategic discontinuity to study the national income of an advancing economy. A model
of systemic changes based upon an equation of production and consumption is presented. In this study
of the Chinese economy of 1980–2014, over time, the dynamics of policy imbalance is found to decrease considerably, which is consistent with the decreasing trend of shrinking the differences among
the impact coefficients of government consumption, private investment, and private consumption.
Part 1.....InstructionsSelect one of the age groups disc.docxMARRY7
Part 1.....
Instructions
Select one of the age groups discussed in this unit (adolescent, adult, or elderly). Create a community health strategy for dealing with intentional and unintentional injuries (motor vehicle accidents, suicide, or violence).Your response should include information on the morbidity and mortality rates and the key factors associated with the injuries.Your APA-Style essay must be at least two pages in length (not counting the title and reference pages). All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.
Part 2....... Need To Be 1 Paragraph Long
According to the Centers for Medicare Services (CMS), the Affordable Care Act (ACA) was designed to give U.S. citizens improved flexibility and control, allowing them to make more informed decisions about their own health plans and healthcare providers.
Now that the ACA has been in place for several years, do you feel that in fact happened? Discuss the strengths and weaknesses of the ACA today.
.
Part 1 – Add to Website PlanList at least three .docxMARRY7
Part 1 – Add to Website Plan
List
at least three interactive features that could be added to your
site and what purpose each would serve for your site and its visitors.
The form created in Part Two of this assignment can be included as
one of the interactive features.
Part 2 – Refine and finalize your website
Refine
and finalize your website by doing the following:
•
Add a simple web form—such as an order form, a subscription
to a newsletter, or a request for contact.
•
Use division or a table to structure the form elements.
•
Apply JavaScript
®
to validate the form.
•
Finalize a navigation system.
•
Use metadata to increase accessibility and search engine
optimization.
15
WEB/240 Version 1
8
•
Test for functionality and usability.
As in the prior assignment, use only Adobe
®
Dreamweaver
®
or
another HTML editor to refine the homepage developed in Week
Three.
Check
your HTML code using the Markup Validation Service on the
W3C
®
website, (www.w3.org) prior to submitting your web page(s).
A link to this site may be found in the Materials tab on your student
website.
Submit
all website files in a compressed folder.
.
Part 1 True or False Questions. (10 questions at 1 point each).docxMARRY7
Part 1: True or False Questions.
(10 questions at 1 point each)
T
F
A hash algorithm uses a one-way cryptographic function, whereas both secret-key and public-key systems use two-way (i.e., reversible) cryptographic functions.
Answer: _____
T
F
The strongest 3DES (Triple DES) requires the use of three independent keys.
Answer: _____
T
F
When it comes to the ethics of a particular situation, there is only one right answer.
Answer: _____
T
F
Packet filters protect networks by blocking packets based on the packets’ contents.
Answer: _____
T
F
The biggest advantage of
public-key
cryptography over
secret-key
cryptography is in the area of key management/key distribution.
Answer: _____
T
F
In terms of privacy laws, companies have no advantage over the government in terms of the types of data that a company can collect.
Answer: _____
T
F
Intrusion Detection Systems (IDS) provide no protection from internal threats.
Answer: _____
T
F
A Denial-of-Service attack does not require the attacker to penetrate the target's security defenses.
Answer: _____
T
F
AES uses the Rijndael algorithm.
Answer: _____
T
F
A one-time pad is a safe house used only once by an undercover agent.
Answer: _____
Part 2: Multiple Choice Questions. Print
all
the correct answers in the blank following the question; in some cases a fully correct answer may require more than one lettered choice to be selected. (
Each question is worth 2 points.
There is no guarantee of partial credit for partially correct answers.)
If person A uses AES to transmit an encrypted message to person B, which key or keys will A have to use:
a.
A’s private key
b.
A’s public key
c.
B’s private key
d.
B’s public key
e.
None of the keys listed above
Answer(s): ____
From the perspective of
entropy
:
Plaintext will have a higher entropy than the ciphertext
The unequal frequency of characters in human languages tends to reduce the entropy of plaintext messages in that language
Encrypted messages appear to be noise-like
Plaintext requires more transmission bandwidth than ciphertext
None of the above
Answer(s): _____
Protection of a software program that uses a unique, novel algorithm could be legally protected by:
a.
A patent
b.
A copyright
c.
A patent and copyright
d.
Ethical standards
e.
All of the above
Answer(s): _____
Security
threats
include which of the following:
a.
Unlocked doors
b.
Disgruntled employees
c.
Hurricanes
d.
Un-patched software programs
e.
All of the above
Answer(s): _____
Denial of service attacks include:
a.
DNS poisoning
b.
Smurf attack
c.
Ping of death
d.
SYN flood
e.
All of the above
Answer(s): _____
Part 3: Short Answer Questions.
(10 questions at 5 points each)
Alan and Beatrice are both users of PKI. Explain how they use their keys to communicate when Alan sends a private message to Beatrice, and provides proof that he sent the message.
Answer:
Briefly describe the purpose of firewalls and how .
Part 11. Why is it so important in system engineering to become .docxMARRY7
Part 1
1. Why is it so important in system engineering to become familiar with some of the analytical methods?
2. Identify and describe some of the technologies that are being applied in the design process. Provide some examples of typical applications, and describe some of the benefits associated with the application of computerized methods in the design process.
3. How does CAM and CAS relate to system engineering? Describe some possible impacts.
4. How is design review and evaluation accomplished? Why is it important relative to meeting system engineering objectives? Describe some of the checks and balances in the design process.
5. What is included in the establishment of a "functional” baseline, Allocated baseline, and Product baseline? Why is baseline management important?
6. What is configuration management (CM) and how does it relate to system engineering? Define Configuration Identification (CI) and Configuration Status Accounting (CSA).
Part 2
Select a system of your choice, and construct a sequential flow diagram of the overall system development process. Identify the major tasks in system development, and develop a plan/schedule of formal design review. Briefly describe what is covered in each.
Part 3
Discuss some of the problems associated with the application of computerized methods in the design process. Provide examples. What cautions must be observed?
.
Part 1 Using the internet, search for commercial IDPS systems. What.docxMARRY7
Part 1: Using the internet, search for commercial IDPS systems. What classification systems and descriptions are used and how can these be used to compare the features and components of each IDPS? Create a comparison spreadsheet identifying the classification systems you find.
Part 2: What are some of the legal and ethical issues surrounding the use of intrusion detection systems logs and other technology tools as evidence in criminal and legal matters?
Part 3: Write a 2 - 3 page APA style paper summarizing the background, description, and purpose of NIST Special Publication 800-94,
Guide to Intrusion Detection and Prevention Systems
. The last section of your paper should be titled "Author Reflection" and should reflect your critique of the publication examined. You are not expected to read the entire guide, you should be mainly concerned with section two of the report, titled "Intrusion Detection and Prevention Principles" and section three of the report, titled "IDPS Technologies."
Part 4:
Why is it so important in system engineering to become familiar with some of the analytical methods?
Identify and describe some of the technologies that are being applied in the design process. Provide some examples of typical applications, and describe some of the benefits associated with the application of computerized methods in the design process.
How does CAM and CAS relate to system engineering? Describe some possible impacts.
How is design review and evaluation accomplished? Why is it important relative to meeting system engineering objectives? Describe some of the checks and balances in the design process.
What is included in the establishment of a "functional” baseline, Allocated baseline, and Product baseline? Why is baseline management important?
What is configuration management (CM) and how does it relate to system engineering? Define Configuration Identification (CI) and Configuration Status Accounting (CSA).
Part 5: Select a system of your choice, and construct a sequential flow diagram of the overall system development process. Identify the major tasks in system development, and develop a plan/schedule of formal design review. Briefly describe what is covered in each.
Part 6:
Discuss some of the problems associated with the application of computerized methods in the design process. Provide examples. What cautions must be observed?
.
Part 1- Create an outline of the assignment below thenPart 2-1000 .docxMARRY7
Part 1- Create an outline of the assignment below then
Part 2-1000 word assignment
Your fast-food franchise has been cleared for business in all 4 countries (United Arab Emirates, Israel, Mexico, and China). You now have to start construction on your restaurants. The financing is coming from the United Arab Emirates, the materials are coming from Mexico and China, the engineering and technology are coming from Israel , and the labor will be hired locally within these countries by your management team from the United States. You invite all of the players to the headquarters in the United States for a big meeting to explain the project and get to know one another. The people seem to be staying with their own groups and not mingling.
What is the cultural phenomenon at play here (what is it called/ term)?
How do you explain the lack of intercultural communication and interaction?
What do you know about these cultures—specifically their economic, political, educational, and social systems—that could help you in getting them together?
What are some of the contrasting cultural values of these countries?
You are concerned about some of the language barriers as you start the meeting, particularly the fact that the United States is a low-context country, and some of the countries present are high-context countries. Furthermore, you only speak English, and you do not have an interpreter present.
How will this affect the presentation?
What are some of the issues you should be concerned about regarding verbal and nonverbal language for this group?
What strategy would you use to begin to have everyone develop a relationship with each other that will help ease future negotiations, development, and implementation?
.
Part 1 Review QuestionsWhat is the difference between criminal la.docxMARRY7
Part 1: Review Questions
What is the difference between criminal law and civil law?
What is privacy, in the context of information security?
What is intellectual property? Is it offered the same protection in every country of the world? What laws currently protect it in the U.S. and Europe?
What are the three general categories of unethical and illegal behavior?
Part 2: Module Practice
What does CISSP stand for? Using the Internet, find out what continuing education is required in order for the holder of a CISSP to remain current and in good standing.
.
Part 1 Review QuestionsWhat is the difference between authenticat.docxMARRY7
The document contains two parts. Part 1 lists review questions about authentication vs authorization, network security relationships, network vs host intrusion detection systems, and VPNs. Part 2 instructs the reader to create a spreadsheet that encrypts values using a transposition cipher, then further encrypts the results using a substitution cipher.
Part 1 SQLDatabase workScenarioDevelopment of a relationa.docxMARRY7
Part 1: SQL/Database work
Scenario
Development of a relational database system for a food producing company
FoodRU is a Leicester-based food producing company. The company wants to keep details regarding both past and present employees and their assignment to shifts over time. At present, there are three defined shift patterns; the morning shift starts at 6am and finishes at 2pm, the day shift starts at 9am and finishes at 5pm, and the evening shift starts at 4pm and finishes at 12am (midnight). However, management have already indicated that they may need to add further shift patterns in the future (e.g., by adding a night shift to the existing ones so that the company can meet a high user demand for their foods). They therefore require shift details to be stored within a separate Shift table, with attributes that allow the storage of a shift name with its associated start and finish times (use the 24 hour clock for these times).
Past and present employee details are to be kept in the same Employee table, and the details to be kept are the employee’s unique 6 digit reference number, the first name, surname and any other names (if there are any) of the employee, the employee’s gender, contact address and contact telephone, the date on which the employee started his/her employment at the company and the date on which the employee finished his/her employment at the company (should s/he be a past employee). Details regarding staff assignments to shifts include the date that an employee was allocated to work a particular shift, and the date that s/he was taken off the shift (if not still assigned to it). Employees can be assigned to different shifts over time and even to the same shift over different time periods, although they cannot be assigned to more than one shift at any one time. A new employee may not yet be assigned to a shift.
Tasks:
1. Provide the table specifications for the THREE tables that are required by FoodRU to store employee, shift and assignment details. That is, for each of the three tables, you should provide, in a suitable presentation format, the name of the table and a specification of each its attributes to include:
• Attribute name
• Attribute brief description as to its meaning
• a description of the attribute’s data type/integrity (e.g., date field, character field of length 20, number field <= 10, etc. – you can use the Oracle data types within these descriptions if you want to)
• An indication as to whether the attribute is a primary key attribute and/or foreign key attribute
• An indication as to whether the attribute can or cannot take null values
Make sure your design specifies the appropriate links between the three tables. Remember to write down any additional integrity you need to enforce either at a specific table level or across two or more tables, if this is required. Also, remember to write down any justifications for the data types/integrity or for any other design features that.
Part 1 Review QuestionsWhat functions constitute a complete infor.docxMARRY7
Part 1: Review Questions
What functions constitute a complete information security program?
What is the typical size of the security staff in a small organization? A medium-sized organization? A large organization? A very large organization?
Where can an organization place the information security unit? Where should (and shouldn’t) it be placed?
Into what four areas should the information security functions be divided?
Part 2: Module Practice
Design three security posters on various aspects of information security using a graphics presentation program and clip art. Describe the methods you used to develop your design.
.
Part 1A persons lifestyle has a significant influence on the p.docxMARRY7
Part 1:
A person's lifestyle has a significant influence on the person's health and development as he or she moves into middle age (and old age). Stability and change are also common factors in an adult's life.
Describe how middle adulthood provides stability in a person's life. Explain some of the factors that would lead to stability in a person's life as he or she moves through middle age.
Describe some of the more common lifestyle issues that have a negative impact on a person's continued development. Explain how a person may be able to reverse some of the lifestyle influences.
On the basis of your readings, describe what is meant by a midlife crisis. Explain why a midlife crisis may or may not be critical.
Part 2:
Erikson, Gould, Helson, and Levinson provide different perspectives on middle age in adulthood.
Describe each of these theories as it relates to middle adulthood.
On the basis of your readings, compare and contrast these theories. Which one gives a better explanation of middle adulthood?
Justify your answers with appropriate reasoning and research from your text and course readings. Comment on the postings of at least two peers, and provide an analysis of each peer’s postings while also suggesting specific additions or clarifications for improving the discussion question response.
.
Part 1 Review QuestionsWhat is the definition of information secu.docxMARRY7
Part 1: Review Questions
What is the definition of information security? What essential protections must be in place to protect information systems from danger?
Define the InfoSec processes of identification, authentication, authorization, and accountability.
Define project management. Why is project management of particular interest in the field of information security?
What are the five basic outcomes that should be achieved through information security governance?
What is a threat in the context of information security? How many categories of threats exist as presented in this chapter?
Part 2: Module Practice
Find an article that talks about relative risk either from inside the organization or form external sources. Once you locate and read it, compose a 1-2 page paper that summarizes your findings and critique the article. Use a word processor to complete your assignment and submit it as a .docx or .doc document.
.
Part 1 Review QuestionsWhat is a security modelWhat are the es.docxMARRY7
Part 1: Review Questions
What is a security model?
What are the essential processes of access control?
Identify at least two different approaches used to categorize access control methodologies. List the types of controls found in each.
What is COBIT? Who is its sponsor? What does it accomplish?
What is the standard of due care? How does it relate to due diligence?
What is baselining? How does it differ from benchmarking?
Part 2: Module Practice
Make a list of at least ten information security metrics that could be collected for a small internet commerce company with 10 employees. For this senario, the company uses an outside vendor for packaging and distribution. Whom should the metrics be reported?
.
Part 1 Listed below are several key Supreme Court decisions that .docxMARRY7
Part 1:
Listed below are several key Supreme Court decisions that resulted in a clarification of inmate rights.
Choose any one
of the cases listed below. Summarize the facts of the case, the issue that needed to be resolved, the court’s decision, and the reasoning behind the decision.
Helling v. McKinney
(1993)
Washington v. Harper
(1990)
Hudson v. Palmer
(1984)
Bell v. Wolfish
(1979)
Bounds v. Smith
(1977)
Estelle v. Gamble
(1976)
Wolff v. McDonnell
(1974)
.
Part 1 Infrastructure DesignCreate an 8–10-page infrastructur.docxMARRY7
Part 1: Infrastructure Design
Create an 8–10-page infrastructure design document in which you:
Identify the major hardware and software components of your hypothetical e-commerce company's information systems infrastructure.
Design your e-commerce company's hardware (database and proxy servers, network equipment) and software (analytics, big data, API, content management) from a size, scale, type, and interoperability standards perspective.
Document the potential security vulnerabilities and a security design for your e-commerce company.
Use graphical tools to create a data flow diagram (DFD) for your e-commerce company.
Use sources to support your writing.
Choose sources that are credible, relevant, and appropriate.
Cite each source listed on your source page at least one time within your assignment.
Part 2: Updated Gantt Chart
Use Microsoft Project to update the previously created Gantt chart with the major and minor tasks identified in the infrastructure design document.
.
part 1 I attended an international conference on Biotechnology and .docxMARRY7
part 1: I attended an international conference on Biotechnology and one of the sessions I went to was on the subject of bio-engineering a "death gene" that could be introduced into the mosquito population and destroy every mosquito on earth. The discussion that ensued was about the ethics of such a thing. I want you to tell how you feel about introducing such a gene. Look up something about this. Your reference does not have to be about this particular gene, but can be about anything that relates to the discussion. Remember to cite your reference, and write at least 150 words
part 2:
Respond to another student
respond to this
I think that with regulation of the mosquito communities would be a good thing. Mosquitos carry many dangerous diseases and if we can lower the population we can slow the rate of transmission of these diseases. This could save many many lives around the world. I would be hesitant though to release the genetically engineered mosquitos into the environment. In the article I read they releases sterile male mosquitos into the environment. This I feel is a safer way to regulate because we are not altering any genes we are just regulating a naturally occurring issue in nature. Sterile males cannot pass on the genes and also male mosquitos are not the ones who would be likely to pass on the diseases. The article stated that only females bite and therefore males would not be capable of spreading the diseases. With sterile males being released there will be less mosquitos due to lack of repopulation. This will still allow organisms relying on mosquitos for food to still be able to survive with less risk to humans. They are an invasive species so it would help to eliminate the spread of mosquitos to different areas. This will keep the spread of disease throughout areas. I do not think it is right to alter the genes for human use though. It is not how nature had intended. If the gene pops up naturally in the population then it should not be taken out but we should not introduce it due to humans "playing God" with genetics. "Mosquitoes Engineered To Kill Their Own Kind." NPR. NPR, n.d. Web. 22 July 2014. .
.
Part 1 Chapter 7 Summary plus end of chapter discussion of Alfred.docxMARRY7
Part 1:
Chapter 7 Summary plus end of chapter discussion of Alfred Marshall, should be 100-250 words
Part 2: The discussion on the first 7 pages is a satire on the economists (known as the neoclassical economists).
List 4 passages that can be considered satire.
(You need not write the entire passage.
Simply show clearly where the passage begins and ends.)
.
Parent Involvement Plan This week you will create a Parent Involve.docxMARRY7
Parent Involvement Plan
This week you will create a Parent Involvement Plan in response to the following scenario:
Imagine you are working with infant, toddler and preschool aged children in a child care center. The majority of the children has special needs and receives early intervention or are on an IEP. Many of the children’s parents work two jobs and have a difficult time participating in the center's activities. Whenever the center plans an event, the parental involvement is lower than desired. The center has tried to increase parental involvement through such methods as calling to remind parents and sending home notices, but is not having any luck.
Your assignment is to create a Parental Involvement Plan to encourage better participation from parents. Follow these steps to develop your plan:
Step 1:
Identify the issue, discuss your beliefs about the situation, and formulate conclusions and offer suggestions to the director of the child care center.
Step 2:
Create a Parent Involvement Plan that your director can copy and paste into the employee and parent handbook. Your plan should include:
The importance of early intervention and individual educational plans
Ways to assist students and their families
The importance of parent involvement
Please use the template provided and your rubric as your guide to completing this assignment.
.
Parenting Practices Over GenerationsGeneration 1 Years children.docxMARRY7
Parenting Practices Over Generations
Generation 1: Years children were raised (19XX-XXXX)
Generation 2: Years
Generation 3: Years
Parenting Practice 1: Education
Parenting Practice 2:
Parenting Practice 3:
Parenting Practice 4:
.
ParamsThe interface must be pleasing to look at (a basic form wit.docxMARRY7
Params:
The interface must be pleasing to look at (a basic form with the four fields listed below, a playlist queue (checked listbox) and media player will suffice).
There must be a separate file that will contain information about each soundtrack in your system. That information will be:
Title;
Artist;
Note area;
Type; and
Anything else that you wish to include on each record.
There must be a way to add data to this file.
There must be a way to delete data from this file.
There must be at least one report using data from the file.
There must be a queue to allow you to play selected music tracks in sequence (like two in a row) without manual intervention.
There must be a way to show the data in at least two different sequences (by title, by artist, etc.).
There must be documentation explaining how your Jukebox works (how you add songs, play songs, etc.).
Currently there is a Text file that contains the information about the wav files to be played, several wav files that the text file references. I have also made an access database from the text file.
.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
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Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
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How to Setup Warehouse & Location in Odoo 17 InventoryCeline George
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
How to Setup Warehouse & Location in Odoo 17 Inventory
Munich personal re p ec archiveshould a government fiscally
1. Munich Personal RePEc Archive
Should a Government Fiscally Intervene
in a Recession and, If So, How?
Harashima, Taiji
Kanazawa Seiryo University
2 April 2017
Online at https://mpra.ub.uni-muenchen.de/78053/
MPRA Paper No. 78053, posted 31 Mar 2017 09:03 UTC
Should a Government Fiscally Intervene in a Recession and, If
So, How?
2. Taiji HARASHIMA*
April, 2017
Abstract
The validity of discretionary fiscal policy in a recession will
differ according to the cause and
mechanism of recession. In this paper, discretionary fiscal
policy in a recession caused by a
fundamental shock that changes the steady state downwards is
examined. In such a recession,
households need to discontinuously increase consumption to a
point on the saddle path to
maintain Pareto efficiency. However, they will not “jump”
consumption in this manner and
instead will choose a “Nash equilibrium of a Pareto inefficient
path” because they dislike
unsmooth and discontinuous consumption and behave
strategically. The paper concludes that
increasing government consumption until demand meets the
present level of production and
3. maintaining this fiscal policy for a long period is the best
option. Consequent government debts
can be sustainable even if they become extremely large.
JEL Classification code: E20, E32, E62, H20, H30, H63
Keywords: Discretionary Fiscal policy; Recession; Government
consumption; Government
debts; Pareto inefficiency; Time preference
*Correspondence: Taiji HARASHIMA, Kanazawa Seiryo
University, 10-1 Goshomachi-Ushi,
Kanazawa-shi, Ishikawa, 920-8620, Japan.
Email: [email protected] or [email protected]
mailto:[email protected]
mailto:[email protected]
1
1 INTRODUCTION
4. Discretionary fiscal policy has been studied from many
perspectives since the era of Keynes
(e.g., Keynes, 1936; Kopcke et al., 2006; Chari et al., 2009;
Farmer, 2009; Alesina, 2012;
Benhabib et al., 2014). An important issue is whether a
government should intervene fiscally in
a recession, and if so, how. The answer will differ according to
the cause and mechanism of
recession. Particularly, it will be different depending on
whether “disequilibrium” is generated.
The concept of disequilibrium is, however, controversial and
therefore arguments continue even
now about the use of discretionary fiscal policy in a recession.
In this paper, the concept of
disequilibrium is not used, but instead the concept of a “Nash
equilibrium of a Pareto inefficient
path” is used.
Recessions are generated by various shocks (e.g., Rebelo,
2005; Blanchard, 2009;
Ireland, 2011; Schmitt-Grohé and Uribe, 2012; McGrattan and
Prescott, 2014; Hall, 2016).
Some fundamental shocks will change the steady state, and if
the steady state is changed
downwards (i.e., to lower levels of production and
consumption), households must change the
5. consumption path to one that diminishes gradually to the
posterior steady state. Therefore,
growth rates become negative; that is, a recession begins.
However, the explanation of the
mechanism of this type of recession is not perfect because an
important question still needs to
be answered. If households discontinuously increase (“jump
up”) their consumption from the
prior steady state to a point on the posterior saddle path and
then gradually move to the posterior
steady state, Pareto efficiency is held and thereby
unemployment rates do not rise. Therefore,
even in a serious and large-scale recession, unemployment does
not increase. This is a very
unnatural outcome of a serious recession.
Harashima (2004, 2009, 2013a) showed a mechanism by which
households do not
jump up their consumption even if the steady state is changed
downward because they are
intrinsically risk averse and non-cooperative and want to
smooth consumption. The
consumption jump does not give them the highest expected
utility; that is, unsmooth and
discontinuous consumption is not optimal for households.
6. Hence, instead of choosing the
posterior saddle path, they will choose a “Nash equilibrium of a
Pareto inefficient path” as the
optimal consumption path. Because of its Pareto inefficiency,
unemployment rates will increase
sharply and stay high during a recession. This paper examines
whether discretionary fiscal
policy is necessary, and if it is necessary, how it should be
implemented when an economy is in
a recession and proceeding on such a Pareto inefficient path.
Fundamental shocks that change the steady state basically mean
shocks on deep
parameters. A representative fundamental shock, an upward
shock on the rate of time preference
(RTP), is examined in this paper. Faced with this shock, a
government has three options: (1) do
not intervene, (2) increase government consumption, and (3) cut
taxes. The consequences of
these options are examined and the outcomes are evaluated to
determine which is the best
option. I conclude that increasing government consumption until
the demand meets the present
level of production and maintaining this fiscal policy during the
recession is the best option.
7. Nevertheless, this option will be accompanied by large and
accumulating government debts, but
these debts can be sustained if the government properly
increases taxes in the future. This option
means that huge government debts will play an essential role as
a buffer against negative effects
of the fundamental shock.
2 A MECHANISM OF RECESSION
2.1 An upward RTP shock
There are various possible sources of recession, but in this
paper, a recession caused by a
fundamental shock, particularly by an upward shift of RTP, is
examined because an upward
shift of RTP seems to be most likely the cause of the Great
Recession (Harashima, 2016). A
2
technology shock was probably not the cause of the Great
Recession because technology does
not suddenly and greatly regress. Frictions on price adjustments
are also unlikely to be the cause
because the micro-foundation of friction does not seem to be
8. sufficiently persuasive (e.g.,
Mankiw, 2001), particularly the micro-foundation of its
persistence. On the other hand,
Harashima (2016) showed that an upward RTP shock could
explain the occurrence of the Great
Recession and showed evidence that the estimated RTP of the
United States increased in about
2008.
RTP plays an essential role in economic activities, and its
importance has been
emphasized since the era of Irving Fisher (Fisher, 1930). One of
the most important equations in
economics is the steady state condition
where θ is RTP and r is the real rate of interest. This condition
is a foundation of both static and
dynamic economic studies. The mechanisms of both θ and r are
equally important. Particularly,
RTP is an essential element in expectations of economic
activities because RTP is the discount
factor for future utility. In addition, RTP has been regarded as
changeable even over short
periods (e.g., Uzawa, 1968; Epstein and Hynes, 1983; Lucas and
9. Stokey, 1984; Parkin, 1988;
Obstfeld, 1990; Becker and Mulligan, 1997). Furthermore,
households behave based on the
expected RTP of the representative household (RTP RH)
(Harashima, 2014, 2016). That is,
changes in RTP and the expected RTP RH can be an important
source of economic fluctuations.
2.2 The model
The model in this paper is based on the models in Harashima
(2004, 2009, 2013a) and assumes
non-cooperative, identical, and infinitely long living
households, and that the number of
households is sufficiently large. Each of the households equally
maximizes the expected utility
0
0
exp
subject to
10. tt
t cA,kf
dt
dk
where yt, ct, and kt are production, consumption, and capital
per capita in period t, respectively;
tt
function; and E0 is the expectations operator conditioned on the
agents’ period 0 information set.
yt, ct, and kt are monotonically continuous and differentiable in
t, and u and f are monotonically
continuous functions of ct and kt, respectively. All households
initially have an identical amount
of financial assets equal to kt, and all households gain the
identical amount of income
tt
in each period. It is assumed that
12. t
t
k
kAf
and
0
2
2
t
t
k
kf
. Both technology (A) and labor
supply are assumed to be constant; that is, there is no
technological progress or population
increase. It is also assumed that there is no depreciation of
13. capital.
2.3 A Nash equilibrium of a Pareto inefficient path
3
t
k
The prior steady state
before the shock on θ: W
The posterior steady
state after the shock
θ
dt
dc
t
after the shock on θ
dt
dk
t
14. Z
Pareto inefficient transition
path
dt
dc
t
before the shock on θ
Pareto efficient
saddle path after
the shock on θ
Pareto efficient saddle
path before the shock
on θ
The effects of an upward shift in RTP are shown in Figure 1.
Suppose first that the economy is
at steady state before the shock. After the upward RTP shock,
dt
dc
t moves
15. to the left (from the solid vertical line to the dashed vertical
line in Figure 1). To keep Pareto
efficiency, consumption needs to jump immediately from the
steady state before the shock (the
prior steady state) to point Z. After the jump, consumption
proceeds on the Pareto efficient
saddle path (the posterior saddle path) from point Z to the lower
steady state after the shock (the
posterior steady state). As a result, negative economic growth
rates continue for a long period,
but unemployment rates will not increase and resources will not
be destroyed or left idle. Note
that an increase in household consumption means consuming the
part capital indicated by the
gap between the posterior saddle path (the thin dashed curve)
and production (the bold solid
curve) for each kt, which initially is the gap between point Z
and W.
1
Figure 1: An upward RTP shock. All terms are defined in the
text.
t
c
16. 1 If depreciation of capital is assumed to exist, the
“consumption” of excess capital will be achieved by a reduction
of
investments that correspond to depreciated capital and an
increase in consumer goods and services.
0
4
However, this discontinuous jump to Z will be uncomfortable
17. for risk-averse
households that wish to smooth consumption. Households may
instead chose a shortcut and, for
example, proceed on a path on which consumption is reduced
continuously from the prior
steady state to the posterior steady state (the bold dashed line),
although this shortcut is not
Pareto efficient. The mechanism for why they are very unlikely
to jump consumption is
explained in Harashima (2004, 2009, 2013a) and also in the
Appendix. Because households are
risk averse and want to smooth consumption, and are also
intrinsically non-cooperative, they
behave strategically in game theoretic situations. Because of
these features, when households
strategically consider whether or not the jump is better for them
(i.e., they are in a game
theoretic situation), they will generally conclude that they
obtain a higher expected utility if they
do not jump. Hence, households will not actually choose this
path and instead will choose a
different transition path to the steady state (e.g., the bold
dashed curve). Because this transition
path is not on the posterior saddle path, it is not Pareto efficient
18. (I call this transition path a
“Nash equilibrium of a Pareto inefficient path” or more simply
a “Pareto inefficient transition
path”). Therefore, the excess resources indicated by the gap
between the posterior saddle path
(the thin dashed curve) and the Pareto inefficient transition path
(the bold dashed curve) for
each kt (initially, the gap between points Z and X) will be
destroyed or left idle. Unemployment
rates will increase sharply and stay high for a long period.
3 SHOULD THE GOVERNMENT FISCALLY
INTERVENE?
3.1 The government’s options
3.1.1 The three options
When households choose a Nash equilibrium of a Pareto
inefficient path, the government
basically has three options: (1) do not intervene, (2) increase
government consumption, and
(3) cut taxes.
If Option (1) is chosen, the gap between the posterior saddle
path and the Pareto
inefficient transition path (initially the gap between points Z
and W) is not filled by any demand.
19. Therefore, unemployment rates increase sharply and huge
amounts of resources are destroyed or
left idle. High unemployment rates and destruction of resources
will continue until the economy
reaches the posterior steady state.
If Option (2) is chosen, government consumption is increased
to fill the demand gap
between the posterior saddle path and the Pareto inefficient
transition path, where government
consumption is indicated on a per capita basis similar to the
other variables. Suppose for
simplicity that government consumption is zero before the
shock. With increases in government
consumption, the path of the sum of government and household
consumption (hereafter
“combined consumption”) can be equal to the posterior saddle
path.
Conceptually, government consumption is the collective
consumption of households
through government expenditures, for example, spending on
various kinds of administrative
services that households receive. Therefore, increases in
government consumption can be
substituted for decreases in household consumption.
Nevertheless, government consumption
20. will not directly generate utility in households. In this sense,
increases in government
consumption may be interpreted as forced increases in
household consumption. Even if
households do not want these increases in government
consumption, however, the increases will
work to increase aggregate demand. Option (2) therefore
indicates a measure to compulsorily
fill the gap between aggregate demand and supply, even against
households’ will, when the
economy proceeds on a Pareto inefficient transition path. Notice
that the excess resources
cannot be used for investments because the economy would
otherwise deviate from a path to the
steady state.
5
If Option (3) is chosen, households’ disposable incomes will
increase, but if the
Ricardian equivalence holds, they will still proceed on a Pareto
inefficient transition path.
Because household consumption does not change, high
unemployment rates and destruction of a
huge amount of resources continue as in Option (1). Because
21. there is a huge amount of excess
capital, no additional investment will be made. Nevertheless, if
the Ricardian equivalence does
not hold, tax cuts may increase household consumption at least
temporarily. Therefore, the
validity of Option (3) depends on the validity of the Ricardi an
equivalence. If households are
sufficiently rational, the Ricardian equivalence will basically
hold at least in the long run.
Therefore, even if tax cuts are effective, they will be effective
only in the short run, and these
short run effects will be reversed because the Ricardian
equivalence will hold in the long run.
3.1.2 Financing
In Option (3), tax cuts are financed by borrowing from
households. In Option (2), an increase in
the government consumption is financed by borrowing from or
tax increases on households.
Nevertheless, financing by borrowing will be preferred in
Option (2) because the Ricardian
equivalence may not necessarily hold in the short run. If the
Ricardian equivalence does not
hold, increases in taxes may increase unemployment rates and
thereby the main aim of
22. Option (2) cannot be fully achieved. Therefore, it is highly
likely that an increase in government
consumption will be financed by government borrowing, and
therefore borrowing is assumed in
this paper. However, financing by borrowing requires tax
increases in the future to pay off the
debt with interest. Options (2) and (3) assume that necessary
future tax increases are fully
implemented by the government.
In addition, it is assumed that a government borrows money
only from its own people,
that is, not from foreigners because foreign borrowing means
that foreigners also intervene in
addition to the government, and such intervention is beyond the
scope of this paper.
3.2 Comparison among options
(1) Economic growth rate
Because production and consumption at the posterior steady
state are lower than those at the
prior steady state, the rate of economic growth is equally
negative during the transition in the
three options except for a subordinate option of Option (2), in
which, as will be shown in
23. Section 4, it is zero. Nevertheless, there actually still will be
steady technological progress
(remember that no technological progress is assumed in the
model), and thereby the actual rates
of growth will not necessarily be negative or zero and may even
be low but positive.
(2) Household utility
Households choose a Nash equilibrium of a Pareto inefficient
path equally in the three options.
Therefore, the utilities of households are basically same in the
three options.
(3) Unemployment
In Options (1) and (3), unemployment rates will rise sharply and
stay high for a long period. In
contrast, in Option (2), high unemployment rates can be avoided
because the gap of demand is
filled by increases in government consumption and thereby no
resources are destroyed or left
idle.
(4) Government debt
24. In Option (1), government debt does not increase because the
government does not borrow
additional money, but in Options (2) and (3), government debt
will increase because of
continuous financing by borrowing. However, if taxes are raised
properly to pay off the debt in
the future, government debt will stabilize in some future period.
3.3 Government debt
6
3.3.1 Is the government debt sustainable?
The usual arguments on sustainable government debts (e.g.,
Hamilton and Flavin, 1986; Bohn,
1995) are not applicable to the government debts in Options (2)
and (3) because households
proceed on an “unusual” Pareto inefficient transition path, so an
alternative approach is
necessary. Let dt be per capita “extra” government debts in
period t that are accumulated in
Option (2) or (3). Because all dt are owned by households as
assumed above, dt also indicates
the financial assets of households, and the other household
assets (other than dt) are ignored for
simplicity. In the future, dt is redeemed with interest, but the
25. redemption takes a long time.
Because the Ricardian equivalence will hold in the long run, it
is assumed that household
consumption is not influenced by dt. Let zt be per capita taxes
to redeem a part of dt in period t
and also let gt be additional government borrowing in Option
(2) or (3) in period t. In Option
(2),
(1)
and in Option (3),
for any t because no new investment is made in Options (2) and
(3) and the household assets
other than the government bonds are ignored; yt and ct are per
capita income and consumption
of households in period t. If the condition
tttt
26. is satisfied indefinitely in a certain future period, government
debt never explodes; that is, it is
sustainable w
equality (1) and inequality (3), the
condition for sustainability in Option (2) is
tttttt
By inequalities (2) and (3), if inequality (4) is satisfied
indefinitely in a certain future period,
government debt is also sustainable in Option (3).
Because the household assets other than dt are ignored, the sum
of a household’s
income and assets is
If the sum of a household’s income and assets exceeds zt, that
is, if
tttt
then zt can be imposed in the sense that households have
enough resources to fully pay taxes.
27. Hence, by inequalities (4) and (5), if
(6)
7
is satisfied, taxes that satisfy the condition for sustainable debts
can be imposed. Here, because
t
r , then inequality (6) always holds. Therefore, for any dt, there
always exists zt that
satisfies inequality (3) indefinitely in a certain future period.
That is, the government debt can
be sustainable for any dt, and even if dt becomes extremely
large, the debt can be sustainable.
Consider an extreme example. If a government collects taxes
that are equivalent to dt from a
household’s financial assets in a period, the government’s debts
are eliminated completely all at
once. That is, any dt can be sustainable.
Such an extreme tax will not actually be imposed, but if dt
exceeds a certain amount
such that
28. (i.e., if taxes exceed income), then they need to be collected
from a part of a household’s
holdings of dt. If households well know the possibility of a tax
on dt in the future, they will not
regard their accumulated financial assets corresponding to dt as
their “real” assets in the sense
they can be freely used for consumption even though dt may be
extremely large. In addition,
because any dt can be sustainable, the tax increase can be
started even after all the excess capital
is eliminated. Hence, a huge amount of government debt can
remain even if there is no excess
capital.
Finally, it is important to note that the increased tax revenues
should not be used to
finance increases in government consumption for purposes other
than dealing with the excess
capital. The increased taxes should be used only to pay down dt
(with interest) because the
economy otherwise deviates from the steady state.
3.3.2 How large can government debt be?
29. Any dt can be sustainable but only if a government properly
satisfied indefinitely in a certain future period. The question
arises, however, when is “a certain
future period”? The time at which taxes are raised is
indeterminate in the discussion in the
previous section. The tax increase can be postponed almost
indefinitely if taxes will certainly be
raised eventually. This indeterminacy may generate a political
struggle because people
intrinsically dislike tax increases, and opposition parties wil l
utilize people’s anti-tax sentiment
as ammunition to attack the government. Opposition parties will
appeal to people that a tax
increase is not necessary at present and that it will only
generate a recession because the
Ricardian equivalence will not hold in the short run. The
government may not sufficiently refute
this argument and persuade people that the current level of
government debt is unsustainable,
because any dt can be sustainable. The incentive for the
government to raise taxes to reduce dt
will therefore be weak.
Is there a problem, however, if dt becomes extremely large? As
shown in Section 3.2.1,
other things being equal, any dt can be sustainable, but if
something changes and affects the
30. sustainability as dt becomes larger, a large dt will not actually
be sustainable. One possible
factor that may change as dt becomes larger is uncertainty. If
the tax increase has been
postponed for a long period, questions about the ability of the
government to govern the nation
and run the economy will arise. Faced with an extremely large
dt, people may begin to suspect
that their government cannot do what it should do. Hence,
uncertainty about the ability of the
government will increase, and increased uncertainty about the
government’s ability means that
the government’s performance in the future is no longer a
certainty.
It has been argued that good institutions, including
governments, enhance economic
growth (e.g., Knack and Keefer, 1995; Mauro, 1995; Hall and
Jones, 1999; Acemoglu et al.,
2001, 2002; Easterly and Levine, 2003; Dollar and Kraay, 2003;
Rodrik et al., 2004). Acemoglu
et al. (2005) conclude that differences in economic institutions
are empirically and theoretically
8
31. the fundamental cause of differences in economic
development.2 It is therefore highly likely
that a government’s ability is an important determinant of total
factor productivity, that is, levels
of production and consumption. Therefore, if uncertainty about
the ability of a government
increases, household’s expected variances of production and
consumption will also increase.
Larger variances of production and consumption mean more
uncertainty about the entire future
economy. That is, as dt increases, household uncertainty about
the entire future economy
increases.
An important consequence of increases in uncertainty about the
entire future economy
is an increase in household RTP. The concept of a temporally
varying RTP has a long history
(e.g., Böhm-Bawerk, 1889; Fisher, 1930; Uzawa, 1968;
Lawrance, 1991; Becker and Mulligan,
1997). In addition, uncertainty has been regarded as a key factor
that changes RTP. Fisher
(1930) argued that uncertainty, or risk, must naturally influence
RTP, and higher uncertainty
tends to raise RTP. Harashima (2004, 2009) showed a
mechanism of how an increase in
32. uncertainty leads to an increase in RTP by constructing an
endogenous RTP model where
uncertainty is defined by the stochastic dominance of the
distribution of steady-state
consumption. Increases in uncertainty will increase RTP RH. An
increase in RTP RH indicates
an increase in the real interest rate at steady state and
consequently a decrease in production and
consumption at the steady state because RTP RH is equal to the
real interest rate at steady state
in Ramsey-type growth models. That is, it is likely that as dt
increases, long-run production and
consumption will decrease.
Considering the effect of dt on RTP RH and on long run
production and consumption,
therefore, a government will not have to postpone the a tax
increase for a long period and to
accumulate an extremely large dt. Nevertheless, the scale of the
effect of dt on RTP RH is
unclear. It may be small and take a long period before
households clearly recognize the negative
effect of a large dt on RTP RH. Hence, the exact upper limit of
dt is unclear, so there will still be
much room for a government with regard to the timing and scale
33. of tax increases.
When the long run negative effect of a huge dt on the expected
household utility
becomes larger than the short run effect of deviation from the
Ricardian equivalence on the
expected household utility, taxes should be raised. However, it
may be difficult to judge which
is currently larger. On the other hand, if the negative effect of
the short run deviation from the
Ricardian equivalence can be controlled such that it remains
very small, it will be better to raise
taxes even for small dt. In this sense, it may be a good idea to
raise the tax rate by a very small
percentage point amount in every period, for example, by 0.5%
per year. Because this tax
increase is very small in each period, the negative effect of any
short run deviation from the
Ricardian equivalence can be controlled such that it is also very
small in each period.
There is another relatively minor problem associated with
extremely large dt. As dt
increases, the amount of necessary future tax increases (as
shown in Section 3.3.1) will
eventually exceed income (yt). Therefore, taxes need to be
34. imposed not only on income but also
on household’s financial assets corresponding to dt. However,
large taxes on financial assets
may be less easy to implement than other types of taxes both
practically and politically.
Nevertheless, an inheritance tax may be relatively easy to
implement, and therefore it will be
important as taxes on household’s financial assets.
3.3.3 Price stability
It has been argued that a large amount of government debt will
result in high inflation (Sargent
and Wallace, 1981). Fiscal theory of price level particularly
emphasizes this mechanism (Leeper,
1991; Sims, 1994, 1998; Cochrane, 2005; Woodford, 2001).
However, Harashima (2006)
showed that the relation between the government debts and
inflation is not simple and presented
a model …