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Unformatted text preview: ECON 314 Oct.11 15.4 reforming financial systems (continued) financial policy and the role of the state-- Stiglitz: seven financial market failures (continued) > imperfect competition > inefficiency of competitive markets in the financial sector > uniformed investors: investors are not aware of limitations of services (gvt can make information disclosure requirements on firms who seek investment and on banks dealing with savers) debate on the role of stock markets in essence, market failures have to do with imperfect competition and insufficient information (and from there, inefficiency in allocation of financial resources) fiscal policy: government accounts budget deficit = government expenditure + net lending - revenues - grants EXPENDITURE-- current expenditure = goods, services, subsidies, transfers, salaries, etc.-- capital expenditure = all kinds of government investment REVENUE-- current revenue = taxes [direct (levied on private individuals, corporations, property) and indirect (export / import duties, value-added tax, excise tax / tariffs, sales tax)] + non-tax current...
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- Fall '11
- Perfect Competition