...Assignment On Fiscal Policy Issues: ← What is the most prominent document that elaborates the Fiscal Policy of Bangladesh? ← As head of the government how would you design your next fiscal policy? Submitted By Md. Mizanur Rahman Roll No: 03 MPA in GPP April 18, 2011 Introduction Fiscal policies play a main role to the economic development of a country. It is the decision of the government about How to earn revenue and gather resources from various sources, for what to spend those earnings and resources, how much to spend and, when to spend. Main elements of fiscal policy are a) Government income and b) Government expenditure The most prominent document that elaborates the Fiscal Policy of Bangladesh is the National Budget passed in the Jatio Sangsad (The National Assembly of Bangladesh) every year. Fiscal Management in Bangladesh Fiscal management one of the big challenges for any government and it is more crucial for a developing country like Bangladesh. So the policy makers need to design fiscal policy very carefully. Maintaining macroeconomic stability and attaining economic growth are the main tasks. So we need to go through the following process to designing and managing fiscal policy: ➢ Inflow of money management for government income ❖ To maintain its daily activities, i.e. to run the government ❖ To ensure protection for the helpless ❖ To provide necessary services to...
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...Fiscal Policy Paper ECO/372 Principles of Macroeconomics The American tax paper relief of 2012, (ATRA), which was enacted on January 2, 2013 permanently extended the 2001 and 2003 federal income tax cuts for 98 percent of tax payers. The tax relief act reflects the approach sunporch that balances responsible reductions in government spending with new revenues and increased progressivity of the tax code. But the new law extended the expansions of several tax credits enacted in the American recovery and reinvestment act of 2009 (the recovery act) that have provided economic opportunities through tax relief and college expense assistance to 25 million low-and middle-income students and working families each year. Together with the additional Medicare and investment income taxes for high-income tax papers in the affordable care act (ACA), ATRA has made the federal taxes system more progressive. Government spending first reached $1.5 trillion in the mid 1980’s, and then breached $2 trillion in the recession year of 1991. In the 1990” s spending increases starts to level off, reaching $3 trillion in 1999. But in the 2000” s with the dot-com crash and the response to 9/11 government spending began to accelerate, reaching $4 million in 2004 and $5 trillion in 2008. Then came the crash of 2008 and government spending exploded years of modest in nominal dollars, spending is expected to resume regular increases by the late 2010’s. Income taxes must be filed by all businesses and...
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...Fiscal policies are utilized to influence the economy via the government revenue and taxes; two types are discussed in Chapter 31, expansionary and contractionary. Expansionary fiscal policies are utilized during a recession to lower taxes, increase the aggregate demand, government spending, and real GDP. The overall goal is to determine the direction of the country; expansionary fiscal policies create budget deficit when it is balanced at the outset. The expansionary policy will close a recession gap, increase spending and create an aggregate demand curve because the people have money for spending on products and services; thereby, increasing the economic condition of the country. For example, when the unemployment rate is high, the government, specifically the Federal Reserve & the U.S. Treasury will boost the economy by increasing the amount of money supplied to the U.S. and reduce the discount rate, and reserve. On the other hand, the contractionary fiscal policies control demand-pull inflation and restrict government spending by increasing taxes. The overall goal of a contractionary fiscal policy is to lower aggregate demand and inflation; creating a budget surplus. In other words, it does the opposite of an expansionary fiscal policy to sustain the economic condition by decreasing the aggregate demand curve for products and services. Unfortunately, it slows the growth of the economy because the people have less income for spending (McConnell, Brue, & Flynn, 2015)...
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...REPUBLIC ACT NO. 7160 AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991 Table of Contents BOOK II LOCAL TAXATION AND FISCAL MATTERS TITLE FIVE LOCAL FISCAL ADMINISTRATION CHAPTER 1 GENERAL PROVISIONS SEC. 304. Scope. – This Title shall govern the conduct and management of financial affairs, transactions, and operations of provinces, cities, municipalities, and barangays. SEC. 305. Fundamental Principles. – The financial affairs, transactions, and operations of local government units shall be governed by the following fundamental principles: (a) No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law; (b) Local government funds and monies shall be spent solely for public purposes; (c) Local revenue is generated only from sources expressly authorized by law or ordinance, and collection thereof shall at all times be acknowledged properly; (d) All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds, unless otherwise provided by law; (e) Trust funds in the local treasury shall not be paid out except in fulfillment of the purpose for which the trust was created or the funds received; (f) Every officer of the local government unit whose duties permit or require the possession or custody of local funds shall be properly bonded, and such officer shall be accountable and responsible for said funds and for the safekeeping...
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...According to (Krugman and Wells 2009) a brief explanation of fiscal policy is when the government uses taxes, government transfers and government purchases of goods and services to shift aggregate demand curve to the right to help heal the economy. (Reem Heakal 2010) describes it in simpler terms as the means by which the government adjusts its levels of spending in order to monitor and influence a nation’s economy. It is the sister strategy to monetary policy with which a central bank influences a nation’s money supply. Reem Heakal 2010 explains that Keynesian economics in theory can influence the macro economy by influencing productivity levels by increasing or decreasing taxes and public spending. This fiscal policy is set in place to get the economy back on track by increasing consumer spending and lowering unemployment. There are tools in the fiscal policy. Ex.: Is an investment tax credit which is a tax break to consumers. (Finishing the Job 2010) talks about the economic crisis was aided with swift stimulus packages to 130 million Americans and continued to find creative ways to unfreeze the credit markets. To summarize fiscal policy is too used to: Stimulate the economy, return to full employment, stabilize prices and combat inflation. Expansionary and contractionary means what it sounds like. We want to expand the economy and aggregate demand (A shift to the right in the demand curve) with government spending thus balancing it with contractionary policy ( A shift...
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...Keynesians and Monetarists over the Effectiveness of Fiscal and Monetary Policy in the Is-Lm Framework In: Business and Management Keynesians and Monetarists over the Effectiveness of Fiscal and Monetary Policy in the Is-Lm Framework Discuss the difference between Keynesians and monetarists over the effectiveness of fiscal and monetary policy in the IS-LM framework. Introduction In economics there are two main schools of thought; these schools differ in their belief of what policies are best suited to attain full employment in the economy. Keynesians tend to favour demand side policies and are more prone to intervene in the market and therefore prefer to use fiscal policy whilst monetarists believe adjustments in money supply is more appropriate in stabilising the market ,therefore preferring monetary policy. In this essay I will discuss the views of Keynesians and monetarists regarding the effectiveness of monetary and fiscal policies in controlling aggregate demand through the IS-LM framework. I will first provide a brief description of the curves explaining their formation and what they represent and then I will go on to examine monetary and fiscal policy within the IS-LM framework. Finally, I will examine the views of monetarist and Keynesians regarding the effectiveness of both policies in raising the level of national l income and also consider the extreme cases. IS-LM framework The IS-LM model was initially developed by John Hicks in 1937 but was made popular...
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...European Fiscal Policy: Coordination of fiscal policy in Eurozone Wibowo Suhaidi (1235036) Tilburg University Course: Financial Economics Professor: S.C.W. Eijffinger October 2011 ABSTRACT The Stability and Growth pack has been discussed extensively in determining whether it is sufficient to undermine fiscal policy coordination in the Eurozone. Even before the recent sovereign debt crisis hitting the Eurozone the SGP has been in much of critics and the current situation calls for deeper analysis on the SGP and whether more coordinated fiscal policy in Eurozone is necessary in strengthening fiscal policy framework. This paper analyzes the implementation of fiscal policy in Eurozone with the SGP as the guideline and found out that despite effectively maintain the budgetary balances of Eurozone countries, the SGP failed to deliver overall fiscal stability. Therefore, a more coordinated form of fiscal policy is required in order to achieve the goal of fiscal stability in Eurozone. 1 I. Introduction The formation of European Monetary Union and the adoption of Euro as the single currency have the consequence that member countries are losing their monetary policy independence at the national scope. Therefore, one possible solution is to use fiscal policy in order to mitigate the asymmetric shocks, as fiscal policy is still on the hand of the national government of each member countries. However, from the Monetary Union point of view it is not desirable to...
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...demand pick up, creating a virtual cycle, the scale of efforts and mixed results over the past two years suggest that any counting on growth must also prudentially count on associated risks. The risk of a fiscal stimulus that does not deliver on growth is an added government debt burden. While there is perhaps no immediate fiscal crisis and the woes of European countries only strengthen the role of the dollar as international reserve currency, there are three issue to worry about: 1. An American debt crisis is unlikely to be a smooth outcome; it will more likely be a trigger strategy at which its risks start looking worse than another group of countries and investors switch to a more diversified base of international currencies for their reserve holdings. This will likely erode the liquidity premiums built into different ends of the Treasury curve and raise the borrowing costs steeply and abruptly. 2. When an American debt crisis looms large, any current government would hate to be the one that takes tough measures to rein them in as the end game approaches. They would all want to borrow, even at exorbitant costs, to roll on the debt and pass on the cost to the next cycle of politicians. This political economy consideration implies that there is a prudential need to manage fiscal issues ahead of time, rather than by reacting at the end. It is quite possible that some of what we are seeing now is in fact an outcome of such political economy considerations—borrow now to "count on"...
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...Discuss the difference between Keynesians and monetarists over the effectiveness of fiscal and monetary policy in the IS-LM framework. Introduction In economics there are two main schools of thought; these schools differ in their belief of what policies are best suited to attain full employment in the economy. Keynesians tend to favour demand side policies and are more prone to intervene in the market and therefore prefer to use fiscal policy whilst monetarists believe adjustments in money supply is more appropriate in stabilising the market ,therefore preferring monetary policy. In this essay I will discuss the views of Keynesians and monetarists regarding the effectiveness of monetary and fiscal policies in controlling aggregate demand through the IS-LM framework. I will first provide a brief description of the curves explaining their formation and what they represent and then I will go on to examine monetary and fiscal policy within the IS-LM framework. Finally, I will examine the views of monetarist and Keynesians regarding the effectiveness of both policies in raising the level of national l income and also consider the extreme cases. IS-LM framework The IS-LM model was initially developed by John Hicks in 1937 but was made popular in 1949 by Hansen in order ‘to provide a framework for analyzing the factors determining the level of aggregate demand’. The IS-LM model is a short run model of the determination of output. It shows the unique combination of income...
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...“Reforma Hacendaria”. “A continuación en este ensayo les presentare algunos de los puntos clave que tienes mayor repercusión y q hay que tomarse en cuenta de esta Reforma Fiscal. • Eliminación del I.D.E y el I.E.T.U • Tasa del 16% en I.V.A en la región fronteriza • Desaparece el régimen de Pequeños Contribuyentes, quienes pagaran el I.V.A. • Nace el Régimen de Incorporación fiscal para personas físicas con actividad empresarial e ingresos menores a 2 millones de pesos. • Se limita la deducción de previsión social para los patrones en un 47% • Los Dividendos tendrán un pago de I.S.R. definitivo del 10% a partir de 2014. • Baja el tope de inversión en automóviles de $ 175,000 a $ 130,000. • No habrá opción de deducción inmediata por inversiones en activos fijos. • Los ingresos por ganancias en bolsa pagarán una tasa del I.S.R. del 10%. • Desparece el Régimen Simplificado y se crean capítulos especiales para agricultores, ganaderos y pescadores, así como transportistas con básicamente los mismos beneficios actuales. • El Dictamen Fiscal queda optativo, a partir del siguiente año, para contribuyentes con ingresos superiores a $100, 000,000.00. • Deducción de vales de despensa solo por monederos electrónicos autorizados por el S.A.T. • Desaparece en forma gradual el Régimen de Consolidación Fiscal para grupos...
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...Fiscal Policy generally refers to the use of taxation and government expenditure to regulate the aggregate level of economic activity in a country. Fiscal policy in Bangladesh basically comprises activities, which the country carries out to obtain and use resources to provide services while ensuring optimum efficiency of the economic units. The policy influences the behaviour of economic forces through public finance. Major objectives of the fiscal policy of Bangladesh are to ensure macroeconomic stability of the country, promote economic growth, and develop a mechanism for equitable distribution of income. The main tools to achieve these objectives are variation in public revenue, variation in public expenditure, and management of public debt. These are reflected in the budgetary operations of the government, prepared and implemented on year-on-year basis. In the initial years of independence, the government of Bangladesh had to spend a large amount of its resources in reconstruction and rehabilitation work. It had negative public savings and limited private investment. Despite large inflows of foreign aid, the increasingly large financing gap became the main concern of the government. The situation was further aggravated by frequent internal and external shocks. Under the circumstances, government fiscal policies during 1970s and 1980s were largely oriented at rehabilitating the war-torn economy as well as stabilising it from various shocks. This had gradually lead to weak...
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...An Essay on Fiscal Federalism Wallace E. Oates Journal of Economic Literature, Vol. 37, No. 3. (Sep., 1999), pp. 1120-1149. Stable URL: http://links.jstor.org/sici?sici=0022-0515%28199909%2937%3A3%3C1120%3AAEOFF%3E2.0.CO%3B2-A Journal of Economic Literature is currently published by American Economic Association. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/aea.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is an independent not-for-profit organization dedicated to and preserving a digital archive of scholarly journals. For more information regarding JSTOR, please contact support@jstor.org. http://www.jstor.org Tue Apr 24 17:00:09 2007 Journal of Economic Literature Vol. XXXVZZ (September 1999) pp. 1120-1 149 An Essay on Fiscal Federalism 1. Introduction ISCAL DECENTRALIZATION is in vogue. Both in the industrialized and in the...
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... 1 2 >> Fiscal Policy A BRIDGE TO PROSPERITY? I n 1998 the Japanese government though on a smaller scale. Indeed, many completed the longest suspension countries attempt to manage aggregate de- bridge in the world. The 6,500-foot mand by using discretionary fiscal policy. span linking Awaji Island to the city of Governments also adjust taxes in an at- Kobe cost $7.3 billion to build. Yet as skep- tempt to manage aggregate demand. They tics had predicted, it currently carries very may reduce taxes to try to stimulate the little traffic—about 4,000 cars a day. By economy or raise taxes when they believe comparison, America’s longest suspension that aggregate demand is too high. bridge, the Verrazano Bridge that links New In this chapter, we will learn how discre- York City’s Staten Island to the borough of tionary fiscal policy fits into the model of Brooklyn, carries more than 300,000 cars short-run fluctuations we developed in each day. Chapter 10. We’ll see how deliberate In Japan, stories like this are common. During the 1990s the Japanese government What you will learn in this chapter: changes in government spending and tax policy affect real GDP. We’ll also see how ® What fiscal policy is and why it is an important tool in managing economic fluctuations ® Which policies constitute an expansionary fiscal policy and which constitute a contractionary fiscal policy ® ...
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...As of late, if one were to turn on the morning or evening news it is a sure bet that there would be some coverage about the Fiscal Cliff. Varying opinions and concerns about it are heard in passing around campus and probably in most courses regardless of its relevance to the material. However, until thorough research, questions about what it actually is, what led to it, and the partisan positions and implications of it were unclear. The Fiscal Cliff, which is of course not a real cliff and merely an imagery-rich term popularized and exploited by most media, signifies extensive tax hikes and automatic spending cuts that are all scheduled to take place at once in the beginning of 2013. Unless the Obama Administration and the Republicans reach an alternative agreement on deficit reduction, the country will likely face increases equivalent to up to 3-4% of current GDP, which many worry will throw us back into a recession (Calmes, 11/15/12). Tax effects include but are not limited to: the expiration of all Bush tax cuts, (part of which included provisions for lower rates in income, estate, capital gains, and dividend taxes), new taxes related to the health care overhaul, the end of the payroll tax holiday with a return to the 6.2% rate, the expansion of the Alternative Minimum Tax which would increase taxes for middle to upper income citizens, and the elimination of certain corporate tax breaks. Some of the latter business related taxes involve the end of the research and experimentation...
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