Fiscal Policy and Sovereign Debt Crises

Introduction The term macro in English language has its origin in the Greek language term makros which means large.Advertising We will write a custom report sample on Fiscal Policy and Sovereign Debt Crises specifically for you for only $16.05 $11/page Learn More Macroeconomics, therefore, studies economic problems from the point of view of entire economy such as aggregate consumption, aggregate employment, national income, and general price level of goods and services (Jain 2007, p. 4). It is the part of economics which studies the over all averages and aggregates of the economic system. In macroeconomics, attention is generally focused on such problems as the level of employment, the rate of inflation, the nation’s total output, and other matters of economic wide significance (Hansen 2003, p. 83). Ordinarily, therefore, macroeconomics is concerned with the economy as a whole or large segment of it. According to Cauvery (2007, p. 51), the scope o f macroeconomics is the use of economic resources at the national level. Apparently, these are the very resources that have their effect on national income, employment, effective demand, aggregate saving, aggregate investment, price level, and the general economic development of a country. This paper discusses two main questions that are related to the subject of macroeconomics. The first part looks at what fiscal policy is and why fiscal deficits and increases in government debt occur. The second part then deals with why some governments have experienced sovereign debt crises and to what extent efforts to reduce government debt risk creating can double-dip recessions. Question 1a: Understanding Fiscal Policy and Why Fiscal Deficits and Increases in Government Debt OccurAdvertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More What is Fiscal Policy? According to Dwivedi (2010, p. 601), fiscal polic y can be defined in general terms as a government’s program of making discretionary changes in the pattern and level of its expenditure, taxation, and borrowings in order to achieve certain economic goals such as economic growth, employment, income equality, and stabilization of the economy on the path to growth. Fiscal policy may also be regarded as any decision to change the level, composition, or timing of government expenditure or to vary the burden, structure or frequency of the tax payment (Shaikh 2010, p. 256). It is also the process of shaping taxation and public expenditure to help dampen the swings of the business cycle and contribute to the maintenance of a growing high employment economy that is free from high or volatile inflation. According to Jain (2007, p. 160), fiscal policy is the policy related to revenue and, expenditure of the government for achieving a set of definite objectives. Apparently, fiscal policy relates to treasury or government exchequer and i ts significance has greatly increased in the recent past. In summary, the role of fiscal policy is confined largely to stabilization of employment and price level. A narrow concept of fiscal policy is budgetary policy. Whilst budgetary policy refers to current revenue and expenditure of the financial year, fiscal policy refers to the budgetary operations including both current and capital receipts and expenditure. The essence of fiscal policy lies, in fact, in the budgetary operations of the government. Typically, the two sides of the government budget are receipts and expenditure. The total receipts of the government are made up of tax and non tax revenue and borrowings, including deficit financing. The items in the budget represent the budgetary resources of the government.Advertising We will write a custom report sample on Fiscal Policy and Sovereign Debt Crises specifically for you for only $16.05 $11/page Learn More The government expenditure refer s to the total expenditure made by the government in any given fiscal year. Generally, the total government expenditure is constituted by payments for goods and services, wages and salaries, interest and loan repayments, subsidies, pensions and grants in aid, and so on. From economic analysis point of view, receipt items give the measure of the flow of money from the private sector to the government sector. The government expenditure on the other hand, represents the flow of money from the government to the economy as a whole. The government’s receipts are inflows and expenditures are outflows. Using its statutory powers, the government can change the magnitude and composition of inflows and outflows and thereby the magnitudes of macroeconomic variables which include aggregate consumption expenditure, and private savings and investments. The magnitude and composition of inflows and outflows can be altered by making changes in taxation and government spending. The policy under which these changes are made is called the fiscal policy. The Scope of Fiscal Policy The scope of fiscal policy comprises the fiscal instruments and the target variables. Fiscal instruments are the variables that the government can use and maneuver at its own discretion to achieve certain economic goals. Fiscal instruments include taxation, direct and indirect, government expenditure, transfer payments, grants and subsidies, and public investment. The target variable on the other hand, are the macro variables including disposable income, aggregate consumption expenditure, savings and investment, imports and exports, and the level and structure of prices (Dwivedi 2010, p. 602).Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Why Fiscal Deficits and Increases in Government Debt Occur There are various reasons why fiscal deficits and increases in government debt occur. In the United States, for example, the government’s budget deficit is attributed to the country’s poor saving habits. Apparently, most American families save a smaller fraction of their incomes than their counterparts in many other countries such as Japan and Germany. Although the reasons for these international differences are not clear, many policy makers in the United States view the low level of saving as a major problem that drives the government into heavy borrowing in order to meet its obligations to its citizens (Mankiw 2008, p. 282). In most cases, a country’s standard of living depends on its ability to produce goods and services. However, this productivity gets affected when citizens do not save as much as they should since saving is regarded as an important long run determinant of a nation’s level of productivity. If, for instance, the United States could somehow raise its saving level, the growth rate of the Gross Domestic Product (GDP) would increase, and over time, the citizens of the United States of America would enjoy a higher standard of living. Despite the fact that the a country may be driven into budget deficits and subsequent debt as a result of poor saving habits among its citizens, the government also has a major part to play in encouraging its people to save more. Many economists have used this argument to suggest that the low saving rate in the United States is at least partly attributable to unfriendly tax laws that discourage saving. In general, many state governments collect revenue by taxing all forms of income received by individuals or corporations. In response to this problem, many economist and law makers have proposed reforming the tax code so as to encourage greater saving. The effect of such a saving incentive on the market for loanable funds is illustr ated by figure 1 (Mankiw 2008, p. 283). As can be seen from the figure, a change in the tax laws to encourage individuals and corporations to save more would shift the supply of loanable funds to the right from S1 to S2. As a result, the equilibrium interest rate would fall, and the lower interest rate would stimulate investment. Whilst the equilibrium interest rate declines from 5 per cent to 4 percent the total amount that may be given out in form of loans increases from $ 1,200 billions to $ 1,600 billions. Figure 1: Saving Incentives Increase the Supply of Loanable Funds Although this analysis of the effects of increased saving is widely accepted among economists, there is little consensus about what kinds of tax changes should be enacted. Many economists endorse tax reforms aimed at increasing saving to stimulate investment and growth. Others, however, are skeptical that such tax changes would have much effect on national saving. These skeptics also doubt the equity of the pro posed reforms. They argue that, in many cases, the benefits of tax changes would accrue primarily to wealthy people, who are least in the need of tax relief (Gupta 2004, p.124). Fiscal budget deficits and increased borrowing are also attributed to less attractive investment incentives. Tax reforms aimed at making investment more attractive will definitely bring many investors on board and the final result would be an improved economy. An investment tax credit, for example, gives a tax advantage to any firm building a new factory or buying new equipment, and this encourages many to invest. Figure 2 shows the effect of a government budget deficit. Figure 2: Effect of Government Budget Deficit When the government spends more than it receives in tax revenue, the resulting budget deficit lowers national saving. The supply of loanable funds decreases and the equilibrium interest rate rises. As depicted by the figure, when the supply shifts from S1 to S2, the equilibrium interest rate ris es from 5 per cent to 6 per cent, and the equilibrium quantity of loanable funds saved and invested falls from $ 1,200 billions to $ 800 billions. Question 1b: Why some Governments have Experienced Sovereign Debt Crises and to what Extent Efforts to Reduce Government Debt Risk Creating can Double-Dip Recessions As explained previously, some countries have ended up in deficits and heavy spending as a result of having unfriendly tax policies that, to a large extent, lead to low saving by citizens and discourage investments. According to Giles (2012, p. 1), fiscal policy can not provide a lasting solution to all economic problems. There are other factors that also affect the economy. In the United Kingdom, the idea of cutting down government expenditure and the rapid increase in the rate of taxation have failed to yield the desired results. On the contrary, they have are blamed for slow economic growth and high unemployment. This in turn, has forced the government to borrow more in ord er to offset its budget deficit. Summers (2012, p. 1) suggests that a better way to deal with Britain’s economic challenges is to first realize that lack of demand is the main factor that is preventing its economy to progress. According to Krugman and Layard (2012, p. 1), the present economic woes are can be attributed to the fact that many countries are operating based on ideas that worked so many decades ago. There is, therefore, a need to create policies that are suitable for the present economic environment. Among others, most economic problems are caused by irresponsible public borrowing behavior and the high levels of poverty and unemployment which leave many individuals economically powerless. It will, therefore, be beneficial for the government to work hard to empower citizens economically. With friendly economic policies in place, many individuals will be encouraged to participate more actively in growing the economy. Reference List Cauvery, R 2007, Public Finance: F iscal Policy, S. Chand Company Limited, New Delhi. Dwivedi, DN 2010, Macroeconomics: Theory and Policy, 3E, Tata McGraw-Hill Education Private Limited, New Delhi, India. Giles, C 2012, Fiscal Policy can’t Cure all Britain’s Ills. Web. Gupta, GS 2004, Macroeconomics; Theory and Applications, Tata McGraw-Hill Publishing Company Limited, New Delhi. Hansen, B 2003, The Economic Theory of Fiscal Policy, Volume 3, Routledge, London, UK. Jain, TR 2007, Macroeconomics Management, FK Publications, New Delhi, India. Krugman, P Layard, R 2012, A Manifesto for Economic Sense. Web. Mankiw, NG 2008, Principles of Macroeconomics, Cengage Learning, Mason, OH. Shaikh, S 2010, Business Environment, 2/E, Pearson Education India, New Delhi, India. Summers, L 2012, Britain Risks a Lost Decade unless it Changes Course. Web. This report on Fiscal Policy and Sovereign Debt Crises was written and submitted by user Giovani I. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Thesis Statement On How Edgar Allan Poes Writings Illuminate His Upbringing

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The Chinese Knight Errant Essay Example | Topics and Well Written Essays - 1500 words

The Chinese Knight Errant - Essay Example However, the material realm is inadequate to construct a more complete definition of what it means to be a Knight Errant, as many of the qualities are the abstract concepts that go hand in hand with morality. The Knight Errant is a principle. It is the principle of right and wrong that guides our decisions as we pursue our ethical objectives. When faced with a moral dilemma, a solution could be forthcoming by simply asking ourselves; What would a Knight Errant do In the answer we would find truth, honesty, compassion, obligation, sincerity, respect, and a wealth of human spirituality that makes us genuinely and uniquely a moral human being. The Knight Errant is selfless in their pursuit of justice in the name of righteousness. This is not a half-hearted endeavor to settle a score or seek revenge for a wrong committed against oneself or one's family. The Knight Errant serves righteousness as a subject serves a master. The only purpose of their actions is to remain true to their moral code that mandates doing the right thing without regards to personal cost, loss, or gain. In the story The Sung Founder Escorts Ching-Niang One Thousand Li translated by LS Lieu, the protagonist Chao K'uang-yin escorts a beautiful young lady through treacherous territory on a journey back to her home. The Knight Errant is a perfect gentleman and never pursues the lady from an aspect of lust. Her family questions the fact that any man could be so pure of heart. Chao is genuinely miffed that anyone would question his motives for helping the beautiful girl. When asked about it he flies into a rage and shouts, "I came here out of righteousness, but you've insulted me with such words. If I coveted her beauty, we'd have been married on the way" (74). This was not a false sense of being forced to do the right thing, it was a genuine display of righteousness that transcends our everyday decisions to behave and act in an acceptable manner. The Knight Errant was not simply following his social norms; he was being true to himself and his beliefs. The acts of a Knight Errant, and the core principle of righteousness, carry over across time and culture as we view it from the perspective of our own value system and look at it through the lens of our current social context. While many of the acts may seem violent and gruesome, their horror is diluted by the principle of justice. Just as the Knight Errant is not a man, the deeds they commit are not the acts. A Knight that kills another man is not a murderer, but an instrument of faith that is correcting a past injustice or a current threat. The deed of killing is not murder, but an act that rectifies past wrongs or eliminates present dangers. In addition, the character does not have to carry the label of Knight Errant to perform as one. The entity and its acts are merely the results of the motivation that drives the action. It is not a formalized or well-defined schema. In the story The Lady Knight Errant translated by LS Lieu, a young woman is asked what she is carrying in the lea ther bag by her side. She replies "The head of my enemy" (80). Her friend curiously looks inside the bag. "He saw a bearded head, all smashed and smeared with blood" (80). The woman continues to

The history of cremation Essay Example | Topics and Well Written Essays - 500 words

The history of cremation - Essay Example "With the advent of the Bronze Age -- 2500 to 1000 B.C. -- cremation history moved into the British Isles and into what is now Spain and Portugal. Cemeteries for cremation developed in Hungary and northern Italy, spreading to northern Europe and even Ireland. In the Mycenaean Age -- circa 1000 B.C. -- the history cremation became an integral part of the elaborate Grecian burial custom." (Cremation History). By the time of Homer in 800 B.C., cremation turned out to be one of the most dominant modes of disposition and it became popular for reasons of health and expedient burial of slain warriors. Cremation was widely practiced during the time of the Roman Empire, i.e. 27 B.C. to 395 A.D. and the elaborate cremation urns containing cremated remains were found from this period. During the middle ages, cremation was forbidden by law all through Europe and it was used as a means of punishment for heretics by authorities. However, there were cases of mass cremations which were performed out of necessity during the times of contagious diseases, war etc.

Desirees Baby Analysis of Racism

Desirees Baby Analysis of Racism We live our life within the boundaries of our belief systems and moral guidelines we were raised with such as social classes and race .The story tells about love, slavery, and racism victimizes everybody without equivalent consequence. The story is heaped with ironies. The narrator uses symbolism and irony to convey the themes of half-blood, racial hatred, unequal gender roles, and social ladder. Irony and symbolism are also used to enhance the story, captivating the minds of the reader until the very end. Foreshadowing his belief that Desirees   ancestry is possibly African-American . As the child begin to get older her skin pigmentation darkens and Armand feels as the baby is not his child Monsieur Valmonde grew practical and wanted things well considered: that is, the girls obscure origin. Armand looked into her eyes and did not care. He was reminded that she was nameless. What did it matter about a name when he could give her one of the oldest and proudest in Louisiana? Armands makes you feel as since the child had African-American heritage he dont want any responsibility for the child be name after him . Desiree mother feels like there was a racial indifferences between the child and the parents after she took the child to the window to see if it was the lighting in the home . This is not the baby! she exclaimed, in startled tones. French was the language spoken at Valmonde in those days. This comparison between Desirees baby and Zandrine could be that she feels the they are both bi-racial. At this point Desirees notices the difference in her the baby herself, When the baby was about three months old, Desiree awoke one day to the conviction that there was something in the air menacing her peace. It was at first too subtle to grasp. It had only been a disquieting suggestion; an air of mystery among the blacks; unexpected visits from far-off neighbors who could hardly account for their coming. One of La Blanches little quadroon boyshalf naked toostood fanning the child slowly with a fan of peacock feathers. Desirees eyes had been fixed absently and sadly upon the baby, while she was striving to penetrate the threatening mist that she felt closing about her. She looked from her child to the boy who stood beside him, and back again; over and over. Ah! It was a cry that she could not help; which she was not conscious of having uttered. The blood turned like ice in her veins, and a clammy moisture gathered upon her face. She stayed motionless, with gaze riveted upon her child, and her face the picture of fright. She confronts her husband for understanding,   Ã‚  Ã‚   Armand, she panted once more, clutching his arm, look at our child. What does it mean? Tell me.   Ã‚  Ã‚   He coldly but gently loosened her fingers from about his arm and thrust the hand away from him. Tell me what it means! she cried despairingly.   Ã‚  Ã‚   It means, he answered lightly, that the child is not white; it means that you are not white. She questions what Armand says and provides evidence to the fact, It is a lie; it is not true, I am white! Look at my hair, it is brown; and my eyes are gray, Armand, you know they are gray. And my skin is fair, seizing his wrist. Look at my hand; whiter than yours, Armand, she laughed hysterically. Armand burns everything that belonged to Desiree and the baby in a huge bonfire. Perhaps as a ritual cleansing of the African American blood, that had tainted, LAbri, his sheltered place.   Some weeks later there was a curious scene enacted at LAbri. In the centre of the smoothly swept back yard was a great bonfire. Armand Aubigny sat in the wide hallway that commanded a view of the spectacle; and it was he who dealt out to a half dozen negroes the material which kept this fire ablaze. While gathering things for the fire he discovers a letter from his mother to his father revealing that it is he that definitely has the Negro blood; although Desirees parentage is unknown. The last thing to go was a tiny bundle of letters; innocent little scribblings that Desiree had sent to him during the days of their espousal. There was the remnant of one back in the drawer from which he took them. But it was not Desirees; it was part of an old letter from his mother to his father. He read it. She was thanking God for the blessing of her husbands love:   Ã‚  Ã‚   But above all, she wrote.   I thank the good God for having so arranged our lives that our dear Armand will never know that his mother, who adores him, belongs to the race that is cursed with the brand of slavery.

Reconstruction of African Americans Dbq Essay

African Americans were given the opportunity to vote. There opinion began to matter. As Alfred H. Ward expresses in his art black men waiting in a line, it means much more than a single file. Displaying the men dressed in different outfits and uniforms waiting to put in their opinion, their vote (Document A). Negroes were now being viewed as another person and another opinion needed. It was even expressed that one shall not be denied a vote for their race (Document C). This is yet again another prime example of the African Americans new progress in a political aspect. Though it may seem a simple and smooth change it wasn’t a golden path through the transformation, some still could not accept the fact that black deserve to have the right to vote. Dramatic words and publication were existent during the late 19-century, even a cartoon was published of an African American man dying, and reason of death being he used his right to vote (document F). Soon the African Americans had their heads soaring high, some people were finally giving them some social respect. Along with the 14th amendment supporting their new freedom things seemed to be changing. Simply re stated â€Å" no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States† just with the first statement, African Americans are entitled to even more rights (Document B). Again, the civil rights act of 1875, this enacted that all persons of the U. S. shall be entitled to full enjoyment of accommodations, advantages, and privileges of inns, public water and entertainment. Also stating that this is applicable to every citizen of every race (Document D). Though yet again things were not always so positive and equal. â€Å"Jim crow laws of the deep south† created many restrictions and much un fair treatment. To the extent of marriages between white and blacks were prohibited in Florida (Document H). In Georgia one could not burry an African American where whites were buried (Document H). Also, in Mississippi, discussion of or defending for social equality would immediately be guilty of a misdemeanor (Document H). Some cases so harsh that blacks who would assert their rights would face unemployment, eviction, and sometimes physical harm. From evidence shown the African Americans had dramatic reconstruction stages in both political views along with social views. They received some respect and rights of being created equal. They also received their right to vote. Though, it didn’t all become easy and perfect they had much progress of reconstruction. Many changes were made. As many lives were transformed.

Philosophy Of Education Paper Essay

As with any successful profession, there must be a strong foundation on which  to build upon. This foundation in the field of education is your personal philosophy of education. Successful teaching includes diversity of every student’s backgrounds, and levels of ability. Without losing sight of goals, my beliefs of teaching and learning are very specific. First, I believe every child deserves to receive an education. No matter their race or income, every child deserves to learn. The are innocent beings, and these children are going to be our future someday. More specifically, the philosophy that I would teach to my students would be Cultural Nationalism. â€Å"The cultural nationalist teacher focuses exclusively on the experience of the oppressed group as the center or pivot of the curriculum† (Asante, p. 4). I want to use what is going on in the world and focus on their cultural experience. This allows children from oppressed groups to feel nurtured in their school environment day by day. Another philosophy that I have is, I believe a teacher should make learning fun for his/her students. When children are having fun at school, It makes them want to come back and keep coming back. Regular curriculum can get pretty boring. Making the curriculum fun engages the students into learning, and helps them understand it better. Also, I believe in staying involved with professional development so we can continuously learn new things. It is important to me to keep using updated technology  in classrooms. â€Å"Matthew Arnold warned that faith in machinery was humankind’s greatest menace† (Postman, p. 36). I do not believe in what  Arnold stated. I think that new technology in the classrooms is constantly helping teachers and the whole education process. Next, I believe in striving to have positive relationships with students and parents. It is very important to have somewhat of a personal relationship with your students and their parents. It really shows that you care as a teacher. Developing positive relationships with your students allows you to understand them more. This allows you to figure out the best way to teach each and everyone of your students. There are times when we encounter students that require a little more effort than others. When we are faced with this type of situation teacher must reflect on the true meaning of teaching. This will enable the teacher to embrace the difference in the learning styles of students and allow the teacher to develop innovative strategies for reaching such a diverse population. Teachers should give all students the chance to let their creative juices flow. With a little nudge and some encouragement there is no end to what a student can do. Teachers must realize that the impact that we have on our students last a lifetime. I can always remember being told knowledge is power. This statement has been true for decades and surely will be true in the future.