What Is Fiscal Policy? Understanding Government Spending & Taxation
Fiscal policy is a crucial tool that determines the economic condition of a country. Even if we realize it or not, fiscal policy can affect our day-to-day lives. But how does this happen? Have you ever wondered on what basis the governments make alterations in the tax systems and other financial matters of a country? ... Read more
The Progressive Case for Abolishing the Corporate Income Tax
Reform of the corporate income tax is shaping up to be one of the big issues facing Congress in 2017. Republicans are pushing for big cuts in the corporate tax rate. Most observers seem to assume that conservatives and progressives will be at swords points over those cuts, but they should not be. There is ... Read more
Is US Fiscal Policy About to Go Procyclical, Yet Again? How Can We Tell?
As 2017 begins, the US economy is in the middle of a boom, or at least a boomlet. The official unemployment rate is at or below its target level, stock market indicators are hitting all-time highs, and the Fed is starting to get serious about raising interest rates. All this is reflects the expectation of ... Read more
A Lesson in Unintended Consequences: How Clinton’s Policies Would Raise Effective Tax Rates for the Middle Class
Hillary Clinton is often said to be a policy wonk, deeply enmeshed in specifics and details, but that may be a mischaracterization. In some ways, her approach seems disturbingly superficial, skipping one perceived problem to another with little attention to their underlying causes. In some cases, Clinton seems to have paid little attention to the ... Read more
Marco Rubio Would Leave Economic Policy Rudderless
Stabilizing the national economy is one of the federal government’s key responsibilities. Is that too much to ask? OK, then, can we at least ask that the government not make things worse when instability strikes? Not if you’re Marco Rubio. Sooner or later an oil price meltdown, a banking crisis, or a Chinese hard landing ... Read more
Program Notes for the Greek Endgame: Austerity, Cyprus, and Currency Union Exits
The Greek government has rejected the latest austerity and reform proposals from the EU, the ECB, and the IMF. It has declared a national referendum, scheduled for Sunday, and urges a “No” vote. “”We ask you to reject it with all the might of your soul, with the greatest margin possible,” says Prime Minister Alexis ... Read more
Did Austerity Work in Britain? One Chart Tells It All
The general election campaign is in full swing in Britain, and it seems it’s all about austerity. From London, The New York Times reports that the campaign revolves around a single issue: the economy, and whether its rebound is the result of an austerity policy championed by the Conservative-led government of David Cameron, or in ... Read more
Why Angry Greek Voters Backed Change in Fiscal Policy. What Lessons for America?
First posted Jan. 6, updated Jan 26. Updates in italics Yesterday Greek voters overwhelmingly rejected the policies of extreme austerity favored by its Eurozone partners. Yes, Greece’s problems are, at least in part homemade. No outside powers forced it to run the excessive deficits that fed an overheated boom in the years leading up to ... Read more
Recovery Still Policy-Led, Political Risks on the Rise, EMs Under Pressure
Five years into the crisis, the global recovery remains supported by policies[1]. In 2014, monetary policy will remain accommodative, to facilitate the healing of the financial system and private sector deleveraging. While the Federal Reserve (Fed) will gradually reduce quantitative easing (QE), the European Central Bank (ECB) and the Bank of Japan (BoJ) are likely ... Read more
What Quantitative Easing Did Not Do: Three Revealing Charts
The Fed has declared an official end to quantitative easing. It is a logical time to ask, did QE work? Danielle Kurtzleben gives the honest answer in a recent post on Vox: “It’s very, very hard to know.” Still, we do know three things that QE did not do. These are worth pointing out, especially ... Read more