S10 MyCh15 - Chapter 15 Government spending and its...

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Chapter 15 Government spending and its financing Government Budget Government spending, Taxes and the Macro-economy Deficits and Debt Deficit and Inflation 1
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2 Government Budget : Government outlays = G Government Purchases + TR Transfer Payments + INT Net Interest Payment + profit & loss of public enterprises
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3 Government Budget : Government outlays = G Government Purchases + TR Transfer Payments + INT Net Interest Payment + profit & loss of public enterprises Capital Goods Consumption
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4 Government Budget : Government outlays = G Government Purchases + TR Transfer Payments + INT Net Interest Payment + profit & loss of public enterprises Capital Goods Consumption Social Security Welfare, etc.
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5 Government Budget : Government outlays = G Government Purchases + TR Transfer Payments + INT Net Interest Payment + profit & loss of public enterprises Capital Goods Consumption Social Security Welfare, etc. On bonds (+) On Student loans (-)
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6 Government Budget : Government outlays = G Government Purchases + TR Transfer Payments + INT Net Interest Payment + profit & loss of public enterprises Capital Goods Consumption Social Security Welfare, etc. On bonds (+) On S. loans (-) 2 ways Give/Take 1 way Present for Pas t Negligible in amounts
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7 Relative magnitude Variation over time G Largest TR Medium INT Smallest
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8 Relative magnitude Variation over time G Largest Peak in WWII, valley after, partial return in Korean War, stays TR Medium Increases steadily INT Smallest Rise then fall a bit
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Figure 15.1 Government outlays: Federal, state, and local, 1940-2005 Significant rising trend (now 12% of GDP) 9
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10 Internationally the ratio of G/GDP is much higher in other OECD countries, reaching more than 50% in France Benelux, Scandinavia and Austria, largely as a consequence of Socio-Democrats influence.
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Table 15.1  Government spending in Eighteen OECD  Countries, Percentage of GDP, 2005 11
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Taxes Total tax collections have increased over time, from about 16.5% of GDP in 1940 to about 30% in 2000, though declining to about 27% in 2005 (Fig. 15.2 ) The Government Budget: Some Facts and Figures 12
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Figure 15.2 Taxes: Federal, state, and local, 1940-2005 13
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14 It turns out, the Federal/Local fiscal division and the differential revenue compositions matter in the current Great Recession.
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This note was uploaded on 06/01/2010 for the course ECON 3140 at Cornell University (Engineering School).

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S10 MyCh15 - Chapter 15 Government spending and its...

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