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Friday, 12 December 2008
Fiscal Policy (Definition of)
Fiscal policy involves the Government changing the levels of Taxation and Govt Spending in order to influence Aggregate Demand (AD) and therefore the level of economic activity.
AD is the total level of planned expenditure in an economy (AD = C+ I + G + X – M)
The purpose of Fiscal Policy:
Reduce the rate of inflation, (UK government has a target of 2%)
Stimulate economic growth in a period of a recession.
Basically, fiscal policy aims to stabilise economic growth, avoiding the boom and bust economic cycle.
Fiscal Stance:
This refers to whether the govt is increasing AD or decreasing AD
Expansionary (or loose) Fiscal Policy.
This involves increasing AD,
Therefore the govt will increase spending (G)
and cut taxes. Lower taxes will increase consumers spending because they have more disposable income(C)
This will worsen the govt budget deficit
Deflationary (or tight) Fiscal Policy
This involves decreasing AD
Therefore the govt will cut govt spending (G)
And or increase taxes. Higher taxes will reduce consumer spending (C)
This will lead to an improvement in the government budget deficit
Fine Tuning : This involves maintaining a steady rate of economic growth through using fiscal policy. However this has proved quite difficult to achieve precisely.
Automatic Fiscal Stabilisers
If the economy is growing, people will automatically pay more taxes ( VAT and Income tax) and the Government will spend less on unemployment benefits. The increased T and lower G will act as a check on AD.
In a recession the opposite will occur with tax revenue falling but increased government spending on benefits, this will help increase AD
Discretionary Fiscal Stabilisers
This is a deliberate attempt by the govt to affect AD and stabilise the economy, e.g. in a boom the govt will increase taxes to reduce inflation
Injections (J): This is an increase of expenditure into the circular flow, it includes govt spending(G), Exports (X) and Investment (I)
Withdrawals (W): This is leakages from the circular flow This is household income that is not spent on the circular flow. It includes: Net savings (S) + Net Taxes (T) + Net Imports (M)
Note Fiscal Policy was particularly used in the 50s and 60s to stabilise economic cycles. These policies were broadly referred to as 'Keynesian' In the 1970s and 80s governments tended to prefer monetary policy for influencing the economy.
There are many factors which make successful implementation of fiscal Policy difficult.
(source:www.economicshelp.org)
AD is the total level of planned expenditure in an economy (AD = C+ I + G + X – M)
The purpose of Fiscal Policy:
Reduce the rate of inflation, (UK government has a target of 2%)
Stimulate economic growth in a period of a recession.
Basically, fiscal policy aims to stabilise economic growth, avoiding the boom and bust economic cycle.
Fiscal Stance:
This refers to whether the govt is increasing AD or decreasing AD
Expansionary (or loose) Fiscal Policy.
This involves increasing AD,
Therefore the govt will increase spending (G)
and cut taxes. Lower taxes will increase consumers spending because they have more disposable income(C)
This will worsen the govt budget deficit
Deflationary (or tight) Fiscal Policy
This involves decreasing AD
Therefore the govt will cut govt spending (G)
And or increase taxes. Higher taxes will reduce consumer spending (C)
This will lead to an improvement in the government budget deficit
Fine Tuning : This involves maintaining a steady rate of economic growth through using fiscal policy. However this has proved quite difficult to achieve precisely.
Automatic Fiscal Stabilisers
If the economy is growing, people will automatically pay more taxes ( VAT and Income tax) and the Government will spend less on unemployment benefits. The increased T and lower G will act as a check on AD.
In a recession the opposite will occur with tax revenue falling but increased government spending on benefits, this will help increase AD
Discretionary Fiscal Stabilisers
This is a deliberate attempt by the govt to affect AD and stabilise the economy, e.g. in a boom the govt will increase taxes to reduce inflation
Injections (J): This is an increase of expenditure into the circular flow, it includes govt spending(G), Exports (X) and Investment (I)
Withdrawals (W): This is leakages from the circular flow This is household income that is not spent on the circular flow. It includes: Net savings (S) + Net Taxes (T) + Net Imports (M)
Note Fiscal Policy was particularly used in the 50s and 60s to stabilise economic cycles. These policies were broadly referred to as 'Keynesian' In the 1970s and 80s governments tended to prefer monetary policy for influencing the economy.
There are many factors which make successful implementation of fiscal Policy difficult.
(source:www.economicshelp.org)
Fiscal policy
Fiscal policy refers to government attempts to influence the direction of the economy through changes in government taxes, or through some spending (fiscal allowances).
Fiscal policy can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy:
Aggregate demand and the level of economic activity;
The pattern of resource allocation;
The distribution of income.
Fiscal policy
Fiscal policy refers to the overall effect of the budget outcome on economic activity. The three possible stances of fiscal policy are neutral, expansionary and contractionary:
A neutral stance of fiscal policy implies a balanced budget where G = T (Government spending = Tax revenue). Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
An expansionary stance of fiscal policy involves a net increase in government spending (G > T) through a rise in government spending or a fall in taxation revenue or a combination of the two. This will lead to a larger budget deficit or a smaller budget surplus than the government previously had, or a deficit if the government previously had a balanced budget. Expansionary fiscal policy is usually associated with a budget deficit.
A contractionary fiscal policy (G < T) occurs when net government spending is reduced either through higher taxation revenue or reduced government spending or a combination of the two. This would lead to a lower budget deficit or a larger surplus than the government previously had, or a surplus if the government previously had a balanced budget. Contractionary fiscal policy is usually associated with a surplus.
Methods of funding
Governments spend money on a wide variety of things, from the military and police to services like education and healthcare, as well as transfer payments such as welfare benefits.
This expenditure can be funded in a number of different ways:
Taxation
Seignorage, the benefit from printing money
Borrowing money from the population, resulting in a fiscal deficit.
Consumption of fiscal reserves.
Sale of assets (e.g., land).
Funding the deficit
A fiscal deficit is often funded by issuing bonds, like treasury bills or consols. These pay interest, either for a fixed period or indefinitely. If the interest and capital repayments are too large, a nation may default on its debts, usually to foreign creditors.
Some peculiarities exist: for example, the US owes most of its own debt to itself. Compared to GDP and factoring in inflation, its debt is significantly less than in the past.
Consuming the surplus
A fiscal surplus is often saved for future use, and may be invested in local (same currency) financial instruments, until needed. When income from taxation or other sources falls, as during an economic slump, reserves allow spending to continue at the same rate, without incurring a deficit. Hong Kong ran a fiscal surplus of HK$123.6 billion in fiscal year 2007/08 (ended March 31, 2008), equal to US$15.85 billion or 7.7% of 2007 GDP.
Economic effects of fiscal policy
Fiscal policy is used by governments to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of price stability, full employment and economic growth. Keynesian economics suggests that adjusting government spending and tax rates are the best ways to stimulate aggregate demand. This can be used in times of recession or low economic activity as an essential tool in providing the framework for strong economic growth and working toward full employment. The government can implement these deficit-spending policies due to its size and prestige and stimulate trade. In theory, these deficits would be paid for by an expanded economy during the boom that would follow; this was the reasoning behind the New Deal.
During periods of high economic growth, a budget surplus can be used to decrease activity in the economy. A budget surplus will be implemented in the economy if inflation is high, in order to achieve the objective of price stability. The removal of funds from the economy will, by Keynesian theory, reduce levels of aggregate demand in the economy and contract it, bringing about price stability.
Despite the importance of fiscal policy, a paradox exists. In the case of a government running a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing or the printing of new money. When governments fund a deficit with the release of government bonds, an increase in interest rates across the market can occur. This is because government borrowing creates higher demand for credit in the financial markets, causing a lower aggregate demand (AD) due to the lack of disposable income, contrary to the objective of a budget deficit. This concept is called crowding out. Alternatively, governments may increase government spending by funding major construction projects. This can also cause crowding out because of the lost opportunity for a private investor to undertake the same project. Another problem is the time lag between the implementation of the policy and detectable effects in the economy. An expansionary fiscal policy (decreased taxes or increased government spending) is usually intended to produce an increase in aggregate demand; however, an unchecked spiral in aggregate demand will lead to inflation. Hence, checks need to be kept in place.
(From Wikipedia, the free encyclopedia)
Fiscal policy can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy:
Aggregate demand and the level of economic activity;
The pattern of resource allocation;
The distribution of income.
Fiscal policy
Fiscal policy refers to the overall effect of the budget outcome on economic activity. The three possible stances of fiscal policy are neutral, expansionary and contractionary:
A neutral stance of fiscal policy implies a balanced budget where G = T (Government spending = Tax revenue). Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
An expansionary stance of fiscal policy involves a net increase in government spending (G > T) through a rise in government spending or a fall in taxation revenue or a combination of the two. This will lead to a larger budget deficit or a smaller budget surplus than the government previously had, or a deficit if the government previously had a balanced budget. Expansionary fiscal policy is usually associated with a budget deficit.
A contractionary fiscal policy (G < T) occurs when net government spending is reduced either through higher taxation revenue or reduced government spending or a combination of the two. This would lead to a lower budget deficit or a larger surplus than the government previously had, or a surplus if the government previously had a balanced budget. Contractionary fiscal policy is usually associated with a surplus.
Methods of funding
Governments spend money on a wide variety of things, from the military and police to services like education and healthcare, as well as transfer payments such as welfare benefits.
This expenditure can be funded in a number of different ways:
Taxation
Seignorage, the benefit from printing money
Borrowing money from the population, resulting in a fiscal deficit.
Consumption of fiscal reserves.
Sale of assets (e.g., land).
Funding the deficit
A fiscal deficit is often funded by issuing bonds, like treasury bills or consols. These pay interest, either for a fixed period or indefinitely. If the interest and capital repayments are too large, a nation may default on its debts, usually to foreign creditors.
Some peculiarities exist: for example, the US owes most of its own debt to itself. Compared to GDP and factoring in inflation, its debt is significantly less than in the past.
Consuming the surplus
A fiscal surplus is often saved for future use, and may be invested in local (same currency) financial instruments, until needed. When income from taxation or other sources falls, as during an economic slump, reserves allow spending to continue at the same rate, without incurring a deficit. Hong Kong ran a fiscal surplus of HK$123.6 billion in fiscal year 2007/08 (ended March 31, 2008), equal to US$15.85 billion or 7.7% of 2007 GDP.
Economic effects of fiscal policy
Fiscal policy is used by governments to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of price stability, full employment and economic growth. Keynesian economics suggests that adjusting government spending and tax rates are the best ways to stimulate aggregate demand. This can be used in times of recession or low economic activity as an essential tool in providing the framework for strong economic growth and working toward full employment. The government can implement these deficit-spending policies due to its size and prestige and stimulate trade. In theory, these deficits would be paid for by an expanded economy during the boom that would follow; this was the reasoning behind the New Deal.
During periods of high economic growth, a budget surplus can be used to decrease activity in the economy. A budget surplus will be implemented in the economy if inflation is high, in order to achieve the objective of price stability. The removal of funds from the economy will, by Keynesian theory, reduce levels of aggregate demand in the economy and contract it, bringing about price stability.
Despite the importance of fiscal policy, a paradox exists. In the case of a government running a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing or the printing of new money. When governments fund a deficit with the release of government bonds, an increase in interest rates across the market can occur. This is because government borrowing creates higher demand for credit in the financial markets, causing a lower aggregate demand (AD) due to the lack of disposable income, contrary to the objective of a budget deficit. This concept is called crowding out. Alternatively, governments may increase government spending by funding major construction projects. This can also cause crowding out because of the lost opportunity for a private investor to undertake the same project. Another problem is the time lag between the implementation of the policy and detectable effects in the economy. An expansionary fiscal policy (decreased taxes or increased government spending) is usually intended to produce an increase in aggregate demand; however, an unchecked spiral in aggregate demand will lead to inflation. Hence, checks need to be kept in place.
(From Wikipedia, the free encyclopedia)
Monetary policy
Monetary policy is the process by which the government, central bank, or monetary authority of a country controls
(i) the supply of money,
(ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy.
Monetary theory provides insight into how to craft optimal monetary policy.
Monetary policy is referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply.
Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy involves raising interest rates in order to combat inflation.
Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation.
(From Wikipedia, the free encyclopedia)
(i) the supply of money,
(ii) availability of money, and
(iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy.
Monetary theory provides insight into how to craft optimal monetary policy.
Monetary policy is referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply.
Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy involves raising interest rates in order to combat inflation.
Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation.
(From Wikipedia, the free encyclopedia)
Fiscal
The term fiscal refers to government debt, expenditures and revenues, or to finance (particularly financial revenue) in general.
Fiscal deficit is the budget deficit of federal or local government
Fiscal policy is the discretionary spending of governments. Contrasts with monetary policy.
Fiscal year and fiscal quarter are reporting periods for firms and other agencies.
(From Wikipedia, the free encyclopedia)
Fiscal deficit is the budget deficit of federal or local government
Fiscal policy is the discretionary spending of governments. Contrasts with monetary policy.
Fiscal year and fiscal quarter are reporting periods for firms and other agencies.
(From Wikipedia, the free encyclopedia)
Tuesday, 9 December 2008
Mipango na Makazi
Zipo aina nyingi za mpangilio ya makazi (forms of settlements).
1. Linear
2. Grid
3. Radial
4. Clusters
Pia ipo sera ya serikali (wizara ya ardhi) kuhalalisha maeneo yasiyo rasmi (squatters) ili yapewe hati rasmi na kutambulika kisheria.
Ipo mifano mingi duniani ambapo makazi yasiyo rasmi huhalalishwa (na kutambulika) kisheria.
Baada ya uhalalishwaji wa maeneo hayo, huduma muhimu za kimaisha husambazwa huko, mathalani;
-barabara inayopitika majira yote,
-huduma za maji, umeme n.k.
Mipangilio ya makazi ipo ya aina nyingi kama ilivyoonyeshwa hapo juu. Kwa hiyo sio lazima mpangilio wa ujenzi wa makazi uwe ktk mstari ulionyooka kama wengi wanavyodhani. Inaweza kuwa "organic, random, cluster or even contrasting shapes". Usanifu unatoa nafasi ya kufanya uzuri uonekane ktk maumbile mengi, sio mstari ulionyooka kama tulivyozoea!
1. Linear
2. Grid
3. Radial
4. Clusters
Pia ipo sera ya serikali (wizara ya ardhi) kuhalalisha maeneo yasiyo rasmi (squatters) ili yapewe hati rasmi na kutambulika kisheria.
Ipo mifano mingi duniani ambapo makazi yasiyo rasmi huhalalishwa (na kutambulika) kisheria.
Baada ya uhalalishwaji wa maeneo hayo, huduma muhimu za kimaisha husambazwa huko, mathalani;
-barabara inayopitika majira yote,
-huduma za maji, umeme n.k.
Mipangilio ya makazi ipo ya aina nyingi kama ilivyoonyeshwa hapo juu. Kwa hiyo sio lazima mpangilio wa ujenzi wa makazi uwe ktk mstari ulionyooka kama wengi wanavyodhani. Inaweza kuwa "organic, random, cluster or even contrasting shapes". Usanifu unatoa nafasi ya kufanya uzuri uonekane ktk maumbile mengi, sio mstari ulionyooka kama tulivyozoea!
Fixtures: December 2008 (Man Utd)
03 Dec League Cup (Carling) Blackburn H 20:00 W 5-3 Tevez (4), Nani
06 Dec Barclays Premier League Sunderland H 17:30 W 1-0, Vidic
10 Dec UEFA Champions League Aalborg BK H 19:45 D 2-2 Tevez, Rooney
13 Dec Barclays Premier League Tottenham A 17:30 D 0-0
17 Dec FIFA Club World Cup: Gamba Osaka N* W 5-3 Vidic, Ranaldo, Rooney(2), Fletcher
21 Dec FIFA Club W/Cup, Japan: LDU Quito N* W 1-0, Rooney
26 Dec Barclays Premier League Stoke City A 12:45 W 1-0, Tevez
29 Dec Barclays Premier League Middlesbrough H 20:00 W 1-0 Berbatov
N* - neutral venue (Yokohama Stadium, Japan)
06 Dec Barclays Premier League Sunderland H 17:30 W 1-0, Vidic
10 Dec UEFA Champions League Aalborg BK H 19:45 D 2-2 Tevez, Rooney
13 Dec Barclays Premier League Tottenham A 17:30 D 0-0
17 Dec FIFA Club World Cup: Gamba Osaka N* W 5-3 Vidic, Ranaldo, Rooney(2), Fletcher
21 Dec FIFA Club W/Cup, Japan: LDU Quito N* W 1-0, Rooney
26 Dec Barclays Premier League Stoke City A 12:45 W 1-0, Tevez
29 Dec Barclays Premier League Middlesbrough H 20:00 W 1-0 Berbatov
N* - neutral venue (Yokohama Stadium, Japan)
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