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Haydn W

France's Fiscal Policy Targets Very Challenging Says IMF - NASDAQ.com - 0 views

  • PARIS--French President Francois Hollande has chosen the right path to repair the country's economy and finances, but its fiscal targets are very challenging, the International Monetary Fund said Thursday.
  • At the start of the year, the socialist leader switched from a policy of tax increases to spending cuts to bring down the budget deficit.
  • The planned reduction in taxes mean that the cutbacks to spending relative to trend will need to be very large if public finances are to be brought back to balance
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  • If the government delivers the EUR50 billion ($68.5 billion) of savings over 2015 to 2017 that would be "remarkable by historical standards," the IMF said.
  • data on Thursday showed the French economy remained weak at the start of this year, while Germany posted better-than-expected growth. France escaped the wider euro-zone recession that followed the bloc's debt crisis, but it has failed to post strong growth for the last two years and the government has repeatedly missed its targets for bringing down the deficit.
  • Mr. Hollande launched a Responsibility Pact, under which payroll taxes on businesses would be cut in an effort to boost investment and recruitment
  • The IMF said the measures in the Responsibility Pact would only slowly boost growth to around 1% this year and 1.5% in 2015. It also warned there are risks of a weaker rebound and that inflation would remain around 1% with the economy operating well below capacity.
  • The IMF said the European Central Bank--which indicated last week it may launch stimulus measures in June--could do more to help France meet its targets.
  • "More accommodative monetary conditions would help with the implementation of the fiscal program and bring forward the benefits of structural reforms," the fund said.
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    This article details France's success in it's road to recovery following the Eurozone sovereign debt crisis. This week the IMF has hailed president François Hollande's cutback path to repair the countries economy but commented that his targets may be 'very challenging.' This comes after the French government has delivered vast savings through austerity measures whilst retaining general stability despite the rise of far-right groups like The Front National. In my opinion for a country in the eurozone Hollande's France seems to be doing well for itself on the road to recovery and could set an example for other Eurozone countries, like Greece and Portugal.
John B

How "Dead Men" Fiscal Policy Is Paralyzing Government - 1 views

  • More and more fiscal policy is designed to be permanent and out of the effective control of the lawmakers who create it.
  • The reason is the classic prisoner’s dilemma. Lawmakers (some of them anyway) know they’d benefit from a political grand bargain where Democrats agree to reduce spending by restructuring the big mandatory programs and Republicans agree to raise new revenues by slashing tax subsidies.
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    This article is dealing with a book called "Dead Men" that is about how the government is so divided into two halfs, where both try to stay away from increasing taxes as that is what the voters mostly look for.
Clemence Lafeuille

Supply side economic policies would end the Obama Depression - 4 views

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    This article evaluate fiscal and monetary policy in reference to a real world example, and go over the benefits of supply-side policy. It suggests another course of action for the US government, one where supply-side policy would be emphasised rather than any demand-side policy, because the author states that the economic stagnation is not a demand-side problem. Easy article that evaluates policies in a clear way.
Haydn W

Ukraine Uncertainty Depressing Growth and Investment | The Moscow Times - 5 views

  • As world leaders increase or trash their political clout depending on their audience and the statements they make about the situation in the Ukraine, some analysts were revising Russian GDP growth estimates to as low as 1.1 percent for the year.
  • Wednesday was a calmer day on the stock markets, following a dip of 10.8 percent Monday morning that vaporized near $60 billion of valuation from Russian companies.
  • Although Russia has seen some short-term budget benefits from ruble devaluation and increasing oil prices, the current impasse is not helping to fight stagnation or attract investment.
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  • The ruble strengthened slightly to 36 against the dollar and 49.4 against the euro Wednesday evening. This was well above the lows reached on Monday
  • Tightening fiscal policy was topped by possibly impending U.S. sanctions, including economic ones, followed by President Vladimir Putin's claims that Russia may use force in Ukraine if necessary.
  • The heap of these latest events has caused some analysts to revise their overall economy forecasts.
  • PSB Research said Wednesday it would decrease its initially modest GDP growth estimates for the year from the range of 1.5 to 1.8 percent to 1.1 to 1.3 percent.
  • Political standoff will also further stimulate the outflow of capital, Fedotkova said, as investors are reluctant to channel their money into the country that may be possibly involved in any kind of military activity
  • As for businesses, a recent survey done by the Gaidar Institute suggests that more than a third of CEOs and owners of private companies would consider investing in production this year if the price for equipment went down and if the macroeconomic outlook were more certain, Vedomosti reported Monday. At the same time macroeconomic uncertainty was a headache for only 10 percent of surveyed state-controlled companies. No margin of error was given for the survey.
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    This article explains how the recent stand-off crisis in Ukraine is having a negative effect on the Russian economy, with the Rouble taking a further fall and GDP growth estimates being revised downwards. Predictably sanctions imposed by the west on Russia in response to the occupation of Crimea, an autonomous region of Ukraine populated largely by ethnic Russians, have affected businesses in Russia. We learn from the article that some $60 billion valuation has been lost by Russian companies in light of the tensions. This article relates to the macroeconomic concept of circular flow being a complex process with international trade and governments being involved majorly in proceedings.
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