3.3. Public spending multiplier.
So, government spending have a direct impact on the volume of national production and employment of the population. Like investment, they also have a cartoon or multiplication effect, generating a chain of secondary, tertiary I.T. consumer spending, and also lead to the multiplinary effect of the investment themselves. Public spending multiplier Shows the increment of the GNP as a result of the increment of public spending on the purchase of goods and services:
GNP increase
Growth of state expenses
Show the essence of this multi effect. Suppose that when this level Consumption, investments and government expenditures The equilibrium state of macroeconomics is achieved at point E with the volume of GNP, equal to 60 billion rubles.
Fig. Public spending multiplier
Let the volume of government spending grew by 10 billion p., Consequently, the straight line C + I + G is shifted upwards by 10 billion p. Now the state of macroeconomic equilibrium will be achieved at the E1 point, in which the GNP is already 80 billion rubles. Thus, the increment of government spending by 10 billion rubles. led to an increase in GNP by 20 billion p. Based on this, it can be said that MRG in this case is 2. In fact, MRG in its model completely coincides with the investment multiplier. And if we proceed from the fact that MRC \u003d 1/2, then MPG \u003d I / (I-MPC) \u003d 2. Where MPC is a limiting tendency to consume. Each ruble, consumed by the state for the purchase of goods and services, increased the GNP by 2p., I.e. caused the increment of secondary expenses in the national economy.
Thus, the growth of public procurement increases the equilibrium level of production. Such a mechanism for the influence of public procurement to the release of products suggests that during the recession, public procurement can be used to increase the production of products. And, on the contrary, during the boom, the government can reduce the level of its expenses, thereby reducing the volume of the cumulative millet and production of products.
3.4. The effect of fiscal policy in extreme situations: liquid trap and classical case.
If the economy is in the liquid trap, in which the LM curve is horizontal, the growth of government spending has the maximum impact on the equilibrium income. The interest rate does not change, therefore, there is no braking the growth of government growth on national income.
Fig. Liquid trap
The classic case and the effect of providing private investment. First consider what the effect of displacement is . Effect of displacement It happens when, as a result of the expansionist fiscal policy, the interest rate increases to this size, which decreases private expenses, especially investments. If the LM curve passes vertically, the growth of government spending does not increase the equilibrium level of income, but only increases the interest rate.
The growth of state officials shifts the IS curve to the IS position, but does not affect income. If the demand for money is not susceptible to change the interest rate (as it means vertical LM), then there is a single level of income in which the money market is in equilibrium. Thus The growth of government expenditures does not change the equilibrium level of income, but only increases the equilibrium interest rate. But if the government is increasing, and the level of income is unchanged, it should be compensated by a decrease in personal income. The growth rate of interest is supplanted by private investment. Effect of displacement, accurately determining the meaning of this term, means a decline in private expenses (especially investments), in accordance with the growth rate of interest in the event of a fiscal expansion. When the curve lm is vertical, the effect of displacement will be maximum. The investment schedule shows it. If the positive slope of the curve is stronger than the vertical, the percentage rate when exposed to fiscal policies increases slowly, and as a result, investments are reduced slightly. The dimensions of the displacement effect, thus depend on the tilt of the LM curve and, consequently, from the percentage dependence of demand for money. If there is full-time in the economy, the growth of goods and services purchased by the state should mean that any other sectors buy less goods and services in the amount equal to the highest level of government.
In the economy with short-use resources, the full effect of displacement may not be observed. If the fiscal expansion increases the interest rate, then the income will also increase. The growth of aggregate demand causes an increase in income, and the level of savings increases with increasing income. This savings expansion makes it possible to finance the budget deficit without full displacement of private investment.
In case of incomplete employment and, therefore, with the possibility of increasing the production of the product, the interest rate may not grow, that is, there is no displacement (which is true for the case when monetarist authorities adapt financial expansion to the growth of money supply).
Fig. Classic case
3.5. Balanced budget multiplier.
Taxes and government spending suggest each other. Each is an economic lever affecting the growth of gross national product. But the effect of these levers is the opposite, so the effects of their simultaneous use can be mutually ridden. Tax growth suppresses the dynamics of the GNP, and the increase in public procurement, creating additional demand, can lead to an increase in the supply of goods, i.e., to the growth of GNP. If the degree of influence of the indicated levers is the same, then the effects of their use will be useless.
For the efficient use of taxes and government spending, it is important to accurately determine the effect of the impact of each of them on the dynamics of the GNP. Analysis of a balanced budget multiplier is applied to solve this problem, which represents a peculiar version of the opposite forces - a tax multiplier and government spending multiplier. Compare them among themselves to find a Balanced Budget multiplier. To solve this problem, suppose that the amount of government spending and the amount of taxes collected are equal to each other and are 20 units.
If a limiting tendency to consume (MRC) and a maximum propensity for saving (MPS) can be determined by multiplication effects. Let MRC be equal to 3: 4, A MPS - 1: 4.
The increase in government spending (G) will cause a chain reaction of the growth of aggregate demand and an increase in the GNP. In this example, an increase of 20 units will lead to an increase in GNP to 80 units, since the MG multiplier of MG is inversely proportional to the limiting propensity to savings (if mpS \u003d -1: 4, then MC \u003d 4).
Since government procures of goods and services have a direct direct impact on the value of national income and since they are exogenous and autonomous value, i.e. independent of income level (G \u003d G.), adding them to the amount of consumer and investment costs on the graph is displayed by a parallel shift up curve of cumulative expenses.
The change in the magnitude of government purchases DG as well as the change in other types of autonomous expenses (consumer spending DC or investment costs DI) has a multiplier effect in the Keynesian model. If the state purchases the goods or services in addition to $ 100 (hires an official or teacher and pays him wages, or buys equipment for his company, or began to build a motorway, etc.), i.e. DG \u003d $ 100, then the disposable income of the seller of this product or service increases for this amount and is divided into consumption (C) and savings (s). If the limiting tendency to consumption ( mPC.) Equal to 0.8, as a result, we obtain the pyramid and the effect of the multiplier already familiar to us.
The overall increase in total income (DY) as a result of the growth of government procurement will be: DY \u003d DG × MULT \u003d DG × (1/1 - MPC) \u003d 100 × 5 \u003d 500. Thus, as a result of the growth of public procurement per 100 cumulative income, it has grown five times . The value of 1 / (1 - Mrc) is called a multiplier of public procurement. The government procurement multiplier is a coefficient that shows how many times increased (decreased) total income with an increase in (reduction) of public procurement per unit. For the algebraic conclusion of the public procurement multiplier, we add them to the value of the cumulative income (release) y, also G. We get: Y \u003d C + I.+ G. . Since the consumption function has the form: C \u003d. FROM + Mrc Y. , We substitute it in our equation:, regroup and get:
.
Thus, it is a multiplier of any kind of autonomous expenses: consumer, investment and government. Denote it to A - multiplier of autonomous expenses K a \u003d kc \u003d to i \u003d to g, where the COP is a multiplier of autonomous consumer spending, to the i - multiplier of autonomous investment costs, to G - multiplier of public procurement (it is sometimes called the multiplier of government spending, which is not entirely correct, since the amount of government spending, as we know, also transfers, The multiplier of which has a different formula and magnitude, which will be considered later.) The more Mrc, the more cool curve of the planned EP expenses and the greater the value of the expense multiplier.
It should be borne in mind that the multiplier acts in both directions. With an increase in costs, the cumulative (national) income multiply increases, and with reducing costs, the cumulative (national) income is multiplicatively decreased. This principle is applicable not only to the expense multiplier, but also to all other types of multipliers.
Taxes and their types
As Benjamin Franklin wrote: "There is nothing inevitable in life, except for death and taxes." Tax - This is a compulsory withdrawal by the state from households and firms a certain amount of money not in exchange for goods and services. Taxes appear with the emergence of the state because they are the main source of state revenues. Fulfilling its numerous functions, the state (government) carries the costs that are paid from its income, so taxes are speaking the source of payment costs of the government.
Since the services of the state (which, of course, cannot be provided free of charge) all members of society are used, the state collects fee for these services from all citizens of the country. Thus, taxes are the main tool for redistribution of income between members of society.
The tax system includes: 1) the subject of taxation (who should pay tax); 2) the object of taxation (which is taxed); 3) Tax rates (the percentage in which the tax amount is calculated).
The value with which the tax is paid is called a taxable base. To calculate the amount of tax (t), the value of the taxable base (B t) is multiplied by a tax rate (t): T \u003d B T x T
The principles of taxation were formulated by A. Smita in his great work "Research on the nature and causes of the wealth of peoples", published in 1776. According to Smith, the tax system should be: fair (it should not enrich the rich and making poor); understandable (the taxpayer should know why he pays for one or another tax and why it is); comfortable (taxes should be charged then and thus, when and how it is convenient to the taxpayer, not a tax collector); inexpensive(The amount of tax revenues should significantly exceed tax collection costs).
The basis of modern tax system The principles of justice and efficiency are laid.
Justice must be vertical (This means that people who receive different income must pay unequal taxes) and horizontal(implied that people with equal dohas should pay equal taxes). Through two main types of taxes: straight and indirect. Direct tax - this is a tax on a certain monetary sumobtained by an economic agent (income, profit, inheritance, monetary evaluation Property). Therefore, direct taxes include: income tax; income tax; inheritance tax; property tax; Tax with vehicle owners.Feature direct tax It is the fact that the taxpayer (the one who pays for the tax) and the Tax Player (one who pays the tax to the state) is the same agent. Indirect tax - This is part of the price of goods or services. Since this tax is included in the purchase price, it is implicit. Indirect tax may be included in the price of goods or as fixed amountor as a percentage of price. Indirect taxes include: value added tax (VAT) (this tax is the greatest weight in the tax system of Russia); sales tax; sales tax; excise tax (excisable goods are cigarettes, alcoholic beverages, gasoline, oil, cars, jewelry); customs duty. A peculiarity of indirect tax is that the taxpayer and the tax differ are different agents. The taxpayer is a buyer of goods or services (it is he pays for the tax when buying), and the taxier is a firm that produced this product or service (it pays tax to the state).
IN developed countries 2/3 of tax revenues make up direct taxes, and in developing countries and C. transition economy 2/3 of tax revenues make up indirect taxes, since they are easier to collect and the volume of income depends on prices, and not from income. For the same reason, the state is more profitable to use indirectly, and not direct taxes in the period of inflation. This allows you to minimize the loss. real value tax revenues.
Depending on how the tax rate is established, three types of tax differ: proportional tax, progressive tax and regressive tax
For proportional tax The tax rate does not depend on the amount of income. Therefore, the amount of tax is proportional to the magnitude of the income.
Direct taxes (with the exception of income tax and in some countries of income tax) and almost all indirect taxes are proportional.
For progressive tax The tax rate increases as the amount of income increases and decreases as the income is reduced.
For regressive tax The tax rate increases as income reduction and decreases as income grow.
Explicitly the regressive system of taxation in modern conditions Not observed, i.e. No direct regressive taxes. However, all indirect taxes are regressive, and the higher the tax rate, the more than Regressive it is. The most regressive are excise taxes. Insofar as indirect tax - This is part of the price of the goods, then, depending on the magnitude of the buyer's income, the share of this amount in its income will be the greater the less income, and the less than income. For example, if the excise tax on a cigarette pack is 10 rubles, then the share of this amount in the budget of the buyer, which has an income of 1000 rubles, is 0.1%, and in the buyer's budget that has an income of 5000 rubles. - only 0.05%.
In macroeconomics, taxes are also divided into: autonomous(or chord), which do not depend on the level of income and are indicated by T and incomewhich depend on the level of income and the magnitude of which are determined by the formula: TY, where T is the tax rate, Y is the cumulative income (national income or gross national product)
The amount of tax revenues (tax function) is equal to: T \u003d T + TY
Distinguish between the average and maximum tax rate. Middle rate Tax is the attitude of the tax amount to the magnitude of income: t cf \u003d t / y. Limit rate The tax is the magnitude of the income of the tax amount per additional unit of income increase. (It shows how much the tax amount increases with income per unit): t Pre \u003d DT / DY. Suppose that the economy has a progressive tax system, and income up to 50 thousand dollars. It is taxed at a rate of 20%, but over 50 thousand dollars. - at a rate of 50%. If a person gets 60 thousand dollars. income, then it pays the amount of tax equal to 15 thousand dollars. (50 x 0.2 + 10 x 0.5 \u003d 10 + 5 \u003d 15), i.e. 10 thousand dollars. With the amount of 50 thousand dollars. and 5 thousand dollars. With the amount exceeding 50 thousand dollars., i.e. from 10 thousand dollars. The average tax rate will be equal to 15:60 \u003d 0.25 or 25%, and the maximum tax rate is 5:10 \u003d 0.5 or 50%. With a proportional taxation system, the average and maximum tax rate are equal.
Taxes affect both aggregate demand and a cumulative supply. However, in the framework of our model "Expenses-income", since this is a Keynesian model, the impact of taxes only on aggregate demand.
As part of the "Expense-revenues" model, taxes, as well as public procurement, act on the national income (cumulative release) y multiplicative effect.
Two types of tax multiplier distinguish: 1) Autonomous (chord) tax multipliers and 2) income tax multiplier
19. State expenses, transfers, taxes and a balanced budget.
Public spending multiplier represents the ratio of the change in the equilibrium GNP to the change in the volume of government spending.
The multiplier of government spending shows the GNP increase as a result of the increment of government spending per unit: M G \u003d 1 / (1-MPC) MRC - before.
Tax multiplier - equal to the ratio of changes in the equilibrium issue (income) as a result of changes in tax revenues to the budget.
The model of the tax multiplier in a closed economy under the progressive tax system has the form: M T \u003d -MRS / (1-MRC)
The change in taxes has a smaller impact of the value of cumulative expenses, and therefore, on the amount of national income, since taxing is partially compensated by the reduction in total costs, and partly - a decrease in savings, while the changes in government procurement affect only aggregate costs. Therefore, tax multiplier is less than the government spending multiplier.
Balanced budget multiplier - equal to an increase in government spending and taxes cause an increase in income per magnitude equal to the increase in government spending and taxes; Numerical coefficient equal to one.
The transfer multiplier is a coefficient that shows how many times increases (decreases) total income with increasing (decreasing) of transfers per unit. In its absolute value, the multiplier of transfers is equal to the tax multiplier, but has the opposite sign. Transfer multiplier value than the value multiplier value, since transfers have an indirect impact on the aggregate income, and the costs (consumer, investment and government procurement) are direct.
22. The budget deficiency and budget surplus. Types of budget deficit. Funding budget deficit.
The budget deficit is the excess of the costs of the state over the income. Causes of Budge. DEF-TA: 1. Availability of large ekk development programs 2. Availability of a decline in Ek-KE 3. War, natural disasters, Militarization of Ekki 4. A sharp increase in state. Costs due to inflation 5. Expansion of transf. payments, the introduction of tax benefits in election years. Types of Budge. Def-Ta: 1) structural. Empty, if the right-in consciously lays excess of income expenditures. 2) Real. That cat. It actually develops. 3) cyclic. This is the difference m / in real and structural. Ways to cover the budget. Def-Ta: 1 - Raising tax rates Or the introduction of specials. taxes. 2 - debt financing (internal and external.). Internal debt. Fin-Ie is the release and sale of state. valuable papers on inside The market for its entities of the host and consumers. External is the sale of state. Securities foreign. Gos-you, their governments, entities of the host and consumers. 3 - den. Financing (Monetization Budge. deficit). Possible 2 options: direct emission of money, providing the center. Bank of borrowed CP-in government. 4 - external loans. (In foreign. governments and international organizations) 5 - Senorage. These are income of the issuing institution, the cat is obtained by the monopoly right to conduct a DCT, including den. Emissions. State Expenditures, Cat Finance, at the expense of money emissions, draftingly due to the assignment of the RES-in private sector, buying. Cat ability. Decreases in conditions of inflation, that is, we are talking about inflats. tax. Methods Regulatory Budj.def-Ta: 1IA Concept: The budget should be balanced annually. There are problems with the realization of FP. 2nd concept: The budget should balance during the eq. Cycle, i.e., during the recession period, the right thing is consciously going to the Budge. DEF-T, and during periods of lifting the form-smi surplus. 3Y "Concept of Functional Finance": Ch. The goal is to ensure equilibrium, and on the budget. DEF-T can not pay attention. Fin. The country's position is considered normal if the Budgeon. Def-T does not exceed 2-3% of GDP or 8-10% of the budget expenditure.
23. State Dolg and Regulation of the State Dolga Gos.Dolg - the amount of the debts of the country or foreign legal entity. and physical liberies, governments Dr.STran and International Organization. It includes the amount of accumulated budget deficits, minus the budgetary surpluses and the amount of Finn. Creditors. Species of the village: 1) internal (the sum of debts of the state of his physical fiz. And legal entities); 2) external (the amount of backstage foreigners. Phys. And legal entities, foreign. Governments and Medezhnar. Organizations). Consequences internal agos.Dong: 1 - His growth is dangerous for action with low level income and savings, because The income of us and life levels and the existence of the EF-CT of the consequences of the external state should fall very sharply: 1 is a decrease in living standards in the country; 2 - the lender may require a borrower to fulfill certain obligations. Fin. The situation is considered normal if the state does not exceed 50% of GDP. Measures at the UPR-YU. Dolg: 1) Conversion - change of loans in the direction or ↓; 2) consolidation - change of maturity time usually side of growth; 3) Bond exchange for a regressive ratio, this is ZN. Several previously released bonds exchange one new; 4) delaying loan repayment, I am right-in-mind when the release of new loans does not bring EF CTA because of the large% according to the state. 5) Cancellation of the State Dolga - a complete refusal to commitments.
24. Using the modelIS. – LM. To analyze fiscal policy. Fiscal policy efficiencyStabilization Economic Policy uses fiscal and monetary policy as instruments of macroeconomic regulation. Consider the action of fiscal policy in the model IS.-LM..
Y with y 2 y
Suppose that initially a common balance in the markets of goods and money was achieved at the point E.at a percentage rate g. E. and income Y. E. (Fig. 6.10).model IS.-LM. shows that government spending growth causes an increase in income from Y. E. to u1 and growth interest rate from g. E. before T \\,At the same time, income increases to a lesser extent than expected, since the increase in interest rate reduces the animation effect of government spending: their increase (as well as an increase in other autonomous expenses, tax cuts) partially displaces the planned private investments and consumer spending, i.e. The effect of displacement is observed. In fig. It is equal to 2 - y]. The volume of private expenses decreases due to an increase in the interest rate caused by the growth of real income, which, in turn, is due to a stimulating fiscal policy.
The effect of fiscal politics-Put moments: - Has avoiding the extracts-smoothing of the Ek-th cycle-reduction of DIF-AI in the society-increasing volume of production. This will lead to 2 consequences: -E-AD and the volume of production - through the attribution of taxes will shift the AS curve. As a result, the volume of production will increase from Y1 to Y3 the problem of implementing the fiscal policy: -This Harren long temporary lags: internal (from the awareness of the beginning of the decline before the need to make decisions; from decision-making to the action itself) external (from making measures to res -In in the economy) -Contently to calculate the impact of the parameters of the fiscal policy on the owl costs and the volume of production -EF-T displacement (state expenses displacing private) 2 reasons for the opposition to this EF-TU: 1) incentive stimuli policy leads to an increase in business activity, private investors May increase their investments even in the case of interest rate 2) when analyzing the EF-TA displacement proceeds from savings, but in the event of a politician, income and savings increase the implementation of the autonomous fiscal policy (when the Ek-ka comes out of the recession, autonomous fisk policies inhibits ek-ku) - the impact of the political and economic cycle -for to assess the reserves of the policy of politics, I am a budget of full employment, but it is not always m It goes to evaluate the EC-UA conjugure of BNP in the Republic of Belarus: aimed at stimulating the EC-to-to-GOST and structural restructuring in the economy. Directions of its implementation: 1) Improving the tax structure Consideration of increasing the share of direct taxation2) Reducing the tax burden on the salary fund3) Reduction of the tax burden on the economy4) Increasing the stimulating role of customs policies5) Aligning the terms of taxation for all categories of payers.
Fiscal policy efficiency and OS-STI in RB.
Eff language is considered that fiscal policy, the cat. Provides the most complete flow of taxes in the budget, at the lowest costs of their collection. To determine the efforts, various indicators use:
Ur-ny or tax rate. It is always necessary to compare with GDP growth rates. \u003d Σnal flow / GDP.
- laundry rate \u003d ΔOdizes / ΔВВП
- tax multiplier. Separation between MPC and MPS (MPC / MPS), (for RB - 3,8)
- load level By branches of enterprises.
In the Republic of Belarus, a budget and tax system focused on market conditions, the stage of becoming.
Since 1992, the taxation system in Belarus is in a state of constant reform, which is expressed in approbation of taxes, their rates, tax breaks, the definition of the structure of republican and local taxes, clarify their functional role, etc.
Budget and tax policy of the Republic of Belarus by 11-15 GGs are led:
radical simplification of tax administration and control procedures, strengthening the country's position in world rankings;
optimization of budget spending and improving the efficiency of the use of budgetary funds;
the concentration of budget funds in the priority areas of the country's socio-economic development;
improving the efficiency of public debt management.
reducing the tax burden on profit and fund wages organizations;
improving government finance management;
Budget revenues - cash flowing in gratuitous and irrevocable order in accordance with the legislation Russian Federation At the disposal of the state authorities of the Russian Federation, the subjects of the Russian Federation and local self-government. Revenues are divided into groups, subgroups, articles and stores (four levels). In Russia, the income group of income is used:
tax;
non-tax;
gratuitous arrivals;
revenues of target extrabudgetary funds.
Tax revenues Details are considered in the first paragraphs of this chapter.
Group non-tax revenues Includes a number of subgroups. These subgroups include, for example, revenues from property in state and municipal property, income from land sale and intangible assetsRevenues OT. foreign economic activity etc.
Gratuitous receipts include transfer from non-residents, budgets of other levels, state extrabudgetary funds, state organizations and etc.
Target extrabudgetary funds We are divided into social and economic. TO social Funds belong Pension Fund RF State Fund Employment of the Russian Federation, federal and territorial funds of compulsory medical insurance, Foundation social insurance RF. Economic funds are the Foundation for the Development of the Customs System of the Russian Federation, road funds, etc.
In turn, subgroups are divided into articles and stones. For example, a subgroup "Income tax (income), capital gains" is divided into two articles: income tax (income) of enterprises and organizations and income tax individuals. The article "Income tax with individuals" is divided into three faces: income tax held by enterprises, institutions and organizations, income tax, held tax authorities, and a tax on gambling business.
State budget expenditures - cash directed to the financial support of the tasks and functions of state and local self-government. The classification of government budget expenditures is a group of budget expenditures of all levels, reflecting the direction of budgetary funds for the implementation of the basic functions of the state. The grouping has a four-level structure: sections and subsections, target articles and types of expenses. Sections include national issues, national defense, national security and law enforcement, national economy, housing and communal services, security ambient, education, culture, cinematography and media, healthcare and sports, social policy, intergovernmental transfers, etc.
Budget exaggeration costs federal budgetApproved Federal law "On the federal budget for 2006," 4445 billion rubles were equal. It was 4281 billion rubles. Thus, the actual execution was 96.31 \\% of the plan. The execution of the main sections and subsections was as follows:
nationwide issues - 530 billion rubles, i.e. 12.38 \\% of the budget executed;
functioning of the President of the Russian Federation - 6.9 billion rubles, i.e. 0.16 \\%;
national defense - 682 billion rubles, i.e. 15.93 \\%;
national Security and Law Enforcement - 550 billion rubles, i.e. 12.85 \\%;
national Economics - 345 billion rubles, i.e. 8.06 \\%;
housing and communal services - 53 billion rubles, i.e. 1.24 \\%;
education - 212 billion rubles, i.e. 4.95 \\%;
Pension provision - 141 billion rubles, i.e. 3.29 \\%, etc. According to a promising financial plan approved
The Government of the Russian Federation, the federal budget revenues in 2008 will amount to 7112 billion rubles, in 2009 - 7797 billion rubles. General expenses in 2008 will amount to 6093 billion rubles, in 2009 - 6716 billion rubles.
The volume of the Stabilization Fund at the beginning of 2008 - 4194 billion rubles, at the beginning of 2009 - 5463 billion rubles.
The essence of the stabilization policy constantly conducted by the government is reduced to the impact of the state to aggregate demand and (or) a total proposal in order to maintain their dynamic equilibrium at the desired employment values, price and income levels. The main goal of state economic Policy is an maintaining the economy in full employment.This ensures the absence of unemployment and inflation.
Modern Market Econo-Mika with all the diversity of its models is characterized by a socio-oriented farm, which is completed by state regulation.
Performing functions state regulation It is impossible without the centralization of the funds required for:
- Maintenance social sphere and social protection of the population(Health, culture development, salary budget institutions, pensions and benefits, financing preschool institutions, financial support low-income, etc.);
- development of priority areas of farm(finance of research development, support for the agro-industrial complex, the redistribution of funds between sectors national economy etc.);
- ensuring defense and security of the state(the content of the army, the financing of the military-industrial complex);
- support for international relations(Contributions to international organizations to ensure the participation of states and the like.).
To fulfill all these functions, the Government of the country once is discarded and a budget-and-tax (or fiscal) policy is carried out, which combines events in the formation of a holistic device of the budget system and the tax system of the state.
Fiscal policy (from lat. FISC - tax) - a set of government measures to collect taxes and spending funds of the state budget to achieve macroeconomic equilibrium at the level of complete employment in the absence of inflation.
Keynesian theory considers this policy as the most effective tool for state impact on economic growth, level of employment and price dynamics, because The state expresses not private interests as firms and households, but public. In the Keynesian model of economic equilibrium, the stabilizing role of the fiscal policy is related to its impact on the equilibrium GNP (NDP, ND) through the change in total expenses (aggregate demand).
The fiscal policy includes only such manipulations by the budget, which are not accompanied by a change in the amount of money in circulation.
The fiscal policy consists of discretionary and automatic.
Discretionary fiscal policy (lat. Discrecio - valid at its discretion) is a conscious change in the values \u200b\u200bof taxes and government spending on the part of the government in order to achieve macroeconomic equilibrium at the level of complete employment in the absence of inflation.
Basic Tools of this Policy:
1. Changing the volume of government procurement of goods and services ( G.).
2. Change the amount of income taxation (T).
The nature of the economy has a great influence on the nature of the discretionary fiscal policy; on different phases economic cycle This policy uses various tools (Fig. 8.1).
Fig. 8.1. State Economic Policy during Downtime (but) and lifting (b)
During the economic downturn (insufficient demand) is carried out stimulating discretionary policy (budget expansion policy, expansionist), which develops from the growth of government spending and reducing taxes, which prevents the decline in production and is aimed at an increase in total demand. The task of state economic policy in the period of economic recession(See Fig. 8.1, a) - to achieve an increase in production Y * to a potential level Y 1. and achieving full employment by increasing planned costs ( AE - Aggregated Expenses).
During the economic lift (over demand) is carried out cutting (restriction) Fiscal policy aimed at reducing aggregate demand by reducing government spending and (or) tax growth. The task of state economic policy in the period of economic lifting(see Fig. 8.1, b) - achieve a decrease in production Y * to a potential level Y 1. and eliminating excessive employment by reducing planned costs ( AE).
Also often applied and Combined Fiscal policy, which is the use of both tools at the same time.
So affecting the aggregate demand, discretionary fiscal policy affects the magnitude of the equilibrium issue in the country. This effect has a multiplier and measured using multipliers. public spending (procurement), taxes and balanced budget.
Public spending multiplier (m G.) - The ratio of changes in equilibrium and income to the change in the magnitude of the state procurement of goods and services showing how many times the ultimate growth of the cumulative income exceeds its initial increase in government procurement of goods and services.
This multiplicative effect will look at the example of a stimulating fiscal policy (Fig. 8.2).
Fig. 8.2. Public spending multiplier effect
An increase in public procurement of goods and services on G. shifts the function of planned expenses AE Up and shifts the point of equilibrium from position 1 to position 2. Changes in government spending has a clearly multiplicative effect, since the final increase in planned costs ? AE and cumulative income Y. more than the initial increase in government procurement G..
In the period of economic liftingin order to reduce production and employment, the public procurement of goods and services is made. Then the magnitude of the planned costs is reduced by the magnitude of the reduction of public procurement of goods and services. G.. At the same time, the volume of production and total income is reduced more than on G. Thanks to the multiplier effect (see Fig. 8.2 - reverse transition from point 2 to point 1).
Its calculation formula is similar to the investment multiplier:
This is proved algebraically for the three-sector economy (with the participation of the state). At the point of equilibrium Y \u003d ae \u003d c + i + g \u003d (a + mpc * y) + i + g. Let this equation relative to Y:
From here it is obvious that.
Since MPS< 1, то мультипликатор государственных закупок всегда больше единицы.
It should be noted that the exact same multiplication effect gives an increase in any component of autonomous expenses (see the topic 5)
Economic meaning of government spending multiplier.With increasing government spending, the planned aggregate costs increase on G.. In response to the same magnitude, the volume of production will increase, which means that the cumulative income: ? Y 1 \u003d? G (? Y 1 - This is the primary increase in cumulative income).
The growth of cumulative income will cause, in turn, an increase in consumer (and together with them and cumulative) planned costs for MRC *? Y 1. Thanks to this, the volume of production, which means, the cumulative income will increase on the same value: ? Y 2 \u003d? Y 1 * merc \u003d? G * MRC (? Y 2. - This is a secondary increase in cumulative income, etc.).
A new income increase will cause a new increase in consumer (and together with them and cumulative) planned costs now on MRC *? Y 2.
Then the volume of production, and therefore, the cumulative income will increase as follows:
? Y 3 \u003d? Y 2 * merc \u003d (? Y 1 * merc) * MRC \u003d (? G * MRC) * MRCetc. to infinity.
In general:
? Y n \u003d? N -1 * MRC \u003d? G * MRC N -1.
Hence, an increase in public procurement leads to a multiple (multiplicative) expansion of cumulative income and planned costs.
Tax multiplier (m T.) - the ratio of changes in the equilibrium issue to a change in tax revenues, showing how many times the final increase in total income is superior to the initial change in volume income taxes.
In the presence of income taxation, the disposable income coming to consumer spending and savings becomes less cumulative income on the amount of taxes collected. The consumption feature takes the form :.
During the economic downturn, the extension volume of production and employment is reduced by increasing income tax. At the same time, the disposable income of households increases, and their consumer demand increases. Then the volume of planned expenses will increase, and the volume of production, and the cumulative income is also increasing, and more than the amount of tax reduction due to the action tax multiplier.
The graphic image of the effect of the tax multiplier when the stimulating fiscal policy is presented in Fig. 8.3.
Fig. 8.3. Tax multiplier effect
Increasing income taxes on ? T. Increases the disposable income of households on the same value ( ? Y d \u003d -? T). This increase in disposable income will be spent on the increase in savings MPS *? Y d \u003d -mp *? T and to increase consumption in the amount MPS *? Y d \u003d -mps *? T. As a result, the function of planned costs will be moved up by magnitude. MPS *? T and the equilibrium point will shift out of position 1 to position 2. Changing the income taxation has a multiplicative effect, since the final increase in the planned expenses ? AE and cumulative income Y. Module more than initial income tax cuts ? T..
Tax multiplier is always less than the government spending multiplier, because When tax changes, consumption is partially changing (part of the disposable income is used on savings), while each unit of growth of state expenditures has a direct impact on the volume of output and income.
therefore:
The minus sign means a negative impact of tax growing on the volume of output and income.
It is also proved algebraically. At the point of equilibrium there is equality Y \u003d c + i.
We introduce the function of consumption with regard to taxation:
We will solve this equation regarding Y:
From here it is obvious that
Where is the tax multiplier.
The tax multiplier of the module can be more, and less than a unit, but in any case, it is less than a multiplier of public procurement according to (8.2).
During the period of economic lifting, in order to reduce the volume of production and employment, an increase in income taxation is made. Then the amount of planned costs will decrease by magnitude? T * MPC. At the same time, the volume of production and cumulative income is reduced by module more than on? T. Due to the action of the tax multiplier (see Fig. 8.3 - reverse transition from point 2 to point 1).
Economic meaning of the tax multiplier. The arguments are largely similar to the conclusion of a government procurement multiplier. With increasing income taxation on ? T. Planned costs increase by - ? T * MRC. In response to the same magnitude and the volume of production will increase, and therefore the cumulative income: ? Y 1 \u003d -? T * MRC. The further development of the process of multiplicative expansion of planned costs and cumulative income will occur in the same way as in the event of an increase in government procurement.
In general:
? Y n \u003d? Y n -1 * merc \u003d -? T * MRC N.
At the end of the process of multiplication expansion of income, the total increase in total income will be (according to (5.8)):
Hence, the reduction in income taxation also leads to a multiple (multiplicative) expansion of cumulative income and planned costs.
The simultaneous impact of changes in government spending and income taxes on the change in production volume and cumulative income is presented by the following formula:
Balanced budget multiplier It shows that the same increase in government spending and taxes lead to an increase in equilibrium issue by their increase (this is obvious from (8.3)). Changing government spending has the strongest impact on total costs than changing the values \u200b\u200bof taxes of the same scale. Government spending directly and directly affect cumulative expenses, and the change in the amount of taxes is affected indirectly - through the change in income after paying taxes, which changes the amount of consumer spending. It is always equal to 1 (as), which is equivalent to the absence of multiplicative effects. therefore compliance with the budget balance rules sharply reduces fiscal policy efficiency.
