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    Macro Examples For Everything by EconplusDal

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    Mukmin Shukri
    This document outlines various macroeconomic determinants and concepts. It discusses factors that influence aggregate demand such as interest rates, consumer and business confidence, income levels, and fiscal policies. It also examines determinants of investment, government spending, net exports, and short-run aggregate supply. Additional topics covered include causes of recession, the costs and benefits of economic growth, types of unemployment, monetary and fiscal policy approaches, and the winners and losers of globalization.

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    Macro Examples For Everything by EconplusDal

    Uploaded by

    Mukmin Shukri
    2K views6 pages
    This document outlines various macroeconomic determinants and concepts. It discusses factors that influence aggregate demand such as interest rates, consumer and business confidence, income levels, and fiscal policies. It also examines determinants of investment, government spending, net exports, and short-run aggregate supply. Additional topics covered include causes of recession, the costs and benefits of economic growth, types of unemployment, monetary and fiscal policy approaches, and the winners and losers of globalization.

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    Macro_Examples_for_Everything_by_EconplusDal (1)

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    This document outlines various macroeconomic determinants and concepts. It discusses factors that influence aggregate demand such as interest rates, consumer and business confidence, income levels, and fiscal policies. It also examines determinants of investment, government spending, net exports, and short-run aggregate supply. Additional topics covered include causes of recession, the costs and benefits of economic growth, types of unemployment, monetary and fiscal policy approaches, and the winners and losers of globalization.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    2K views6 pages

    Macro Examples For Everything by EconplusDal

    Uploaded by

    Mukmin Shukri
    This document outlines various macroeconomic determinants and concepts. It discusses factors that influence aggregate demand such as interest rates, consumer and business confidence, income levels, and fiscal policies. It also examines determinants of investment, government spending, net exports, and short-run aggregate supply. Additional topics covered include causes of recession, the costs and benefits of economic growth, types of unemployment, monetary and fiscal policy approaches, and the winners and losers of globalization.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    Macro Examples for Everything

    https://youtu.be/6rzYbj-mskc

    Determinants of Aggregate Demand

    Determinants of Consumption
    Low interest rates - UK 0.5%, Eurozone 0%, Japan 0%, Russia, India

    High Interest Rates - Argentina, Turkey, 40%

    High Consumer & Business Confidence - USA (booming) Eurozone (recovering)

    Low Consumer & Business Confidence - Japan, China, UK

    High House Prices (wealth effect) - UK, USA

    Low Indebtedness - Germany

    High Indebtedness - Japan, Greece

    High real disposable income - Eurozone, USA, Australia

    Low real disposable income - Russia, Venezuela, Brazil

    Low income tax - UK, USA

    Low corporate tax - Ireland, USA

    High income tax - Belgium

    High sales tax - Hungary 27%

    Determinants of Investment
    Interest rates - ​Low​ - Switzerland -.75%, Japan -.1% UK 0.5%, Eurozone 0%, , Russia, India,
    High​ - Argentina 70%, Turkey 24%,

    High Business Confidence - USA, (booming) Eurozone (recovering)


    Low Consumer & Business Confidence - Japan, China, UK

    Low Corporate taxes - Ireland 12.5%, Slovenia, 17%, USA (Trump tax cut 35% → 20%)
    High Corporate taxes - France & Belgium 34%, Australia 30%

    Determinants of Government spending


    Fiscal expansion - Japan (Abenomics) Infrastructure esp., China Infrastructure esp, Hong
    Kong, USA (possible infrastructure spending)

    Austerity - Greece, UK, Spain, Portugal, France, Italy - all controlling national debt

    Determinants of Net Exports


    Weak exchange rate
    British pound (b/c Brexit uncertainty)
    South African Rand, Russian Ruble, Brazilian Real, Turkish lira mostly b/c primary commodity
    exporters & demand for commodities declined

    Strong exchange rate


    Euro, Japanese Yen, Australian Dollar

    Determinants of Short-Run Aggregate Supply

    Commodity prices high/low


    Oil, gas/electricity, food, - UK

    Wages higher
    Eurozone, USA

    Higher sales tax


    UAE implemented 5% VAT, Japan 2014 increase contributed to recession

    Weak exchange rate


    GBP, SA Rand, Turkish Lira - stoking cost-push inflation

    Causes of Recession
    Financial Banking Crises
    UK/USA 2008/9, Eurozone (Spain, Italy, Greece) 2008/9

    Increased interest rates → recession


    Russia 2014, South Africa increased rates to 7 ½% in 2016

    Housing market crash


    UK/USA 2008/9
    Oil Shock/High commodity prices
    UK 2009/2012

    Weak exchange rates - high import prices causing cost-push


    South Africa, Russia, Brazil, Turkey, Nigeria

    Higher Sales tax - Japan increased in 2014

    Falling Commodity Prices for commodity exporters (i.e. oil prices fall → recession)
    Nigeria, Angola, Russia (natural gas), Brazil, Venezuela, Zambia (copper)

    Stagflation
    South Africa, Egypt, Nigeria, Turkey, Argentina, Venezuela

    Benefits of Economic Growth - ​China, India, Botswana, Rwanda, Ireland, any S.E. Asian
    nation

    Costs of Growth ​- China, India, Nigeria, Angola - high rates inflation, income inequality
    increasing, negative production externalities, environmental degradation, dual-economies

    Demand Pull Inflation​ - China, UK, USA

    Cost Push Inflation​ - UK, South Africa, Turkey, Argentina

    Good Deflation​ - UK, Eurozone, Switzerland

    Bad Deflation -​ Japan, Greece → past ten years)

    Costs of Inflation​ - Argentina, Brazil (up to 12% few years ago, UK

    Cyclical Unemployment​ - Eurozone (Greece 21%, Spain 16% unemployment rate,


    South Africa 26%

    Structural Unemployment​ - Eurozone, UK, USA

    Real Wage Unemployment​ b/c wages have risen or strong unions - UK, Germany, France &
    Spain labor unions)k

    Costs of Unemployment ​- Eurozone (Greece, Italy, Spain)


    Income Inequality​ (Low Gini coefficient) Norway, Denmark, Sweden, Finland

    High Gini coefficient​ - Nigeria, Angola, Botswana, South Africa

    Absolute Poverty​ - Zimbabwe, Ethiopia, China, India (esp rural poverty)


    Relative Poverty - UK, USA

    Monetary Policy
    Lower Interest rates​ - Brazil, South Africa, Russia, India - trying to stimulate growth as inflation
    worries lessen

    Higher Interest rates​ - USA, Canada, Turkey (24%), Argentina (70%) - keep inflation in check
    Quantitative Easing -​ Japan, Eurozone, (USA is pulling back)
    Negative Interest Rates​ - Japan, Switzerland

    Fiscal Policy
    Fiscal Expansion​ (Gov spending) - Japan, China, USA
    Austerity​ - UK, Ireland, Portugal, Greece, Italy, Spain, France (esp. Very successful in Ireland)
    Tax Cuts​ - UK reduced income tax - USA reduced corporate taxes
    Tax Increases ​- Australia increased marginal rate to spend more on health care, UK (VAT
    2010), Japan (VAT 2014)

    International Trade & Globalization


    1. ​Globalization winners​ - Asian Tigers, Europe, Gulf States, China, India, Korea, most SE
    Asia b/c rapid increases in HDI, GNI/capita, poverty reduction, FDI increases

    2. ​Globalization losers ​- sub-Saharan Africa (primary commodity dependence, protectionism


    within continent and from MEDCs abroad, governmental corruption
    South America - primary commodity dependence, corruption, & import-substitution policies
    Opened up capital markets to speculative flows of finance having destabilizing effect on
    economies (i.e. Argentina in 1990s)
    North America - especially lower & middle classes as Asian countries have fund comparative
    advantage in manufacturing leading to widespread structural unemployment

    3. ​Protectionism ​- USA Trump’s tariffs → China/Japan retaliation on USA bourbon, jeans, HD


    motorcycles
    EU anti-dumping tariffs on Chinese steel/aluminium & $22bn Airbus subsidies → China
    retaliated on EU wine & EU cars

    4. ​Current Account deficit ​- USA, UK, India since 1990s

    5. ​Current Account surplus ​- China, Germany, Netherlands, Singapore, Norway


    6. ​Fixed Exchange Rate -​ UAE, Saudi Arabia, Qatar, Bolivia

    7. ​Managed Exchange Rate​ - China - Trump labeled currency manipulator

    8. ​Weak Exchange Rate ​- USD, GBP, Turkish Lira, SA Rand

    9. ​Strong Exchange Rate ​- Euro, Yen, Australian $,

    Development
    Successful market-based approach​ - India attracting FDI, China exporting, Botswana,
    Tanzania w/FDI, Mauritius w/FDI

    Failed market-based approach​ - Nigeria, Angola - b/c significant corruption

    Interventionist supply-side approach ​- doesn’t work that well b/c low income increases
    w/poor job creation - causing HDI to be held back
    a. Relative success - Rwanda, Ethiopia b/c health and education investment
    b. Relative failure - Zimbabwe, Zambia (2010), Burundi - authoritarian governments

    Supply Side Policies - Specific to the UK


    https://youtu.be/hBJjoKXCZ8I

    Interventionist
    £31 billion for National Productivity Fund

    1. Education
    £400m school funding 2019 - more funding for maths & Comp. Sci.
    Gov. spending on apprenticeships
    Subsidies/grants for adult training

    2. Healthcare
    NHS budget increasing by £20.5bn above inflation by 2023

    3. Infrastructure
    £28.8bn between 2020-25 as part of national roads fund
    Rail infrastructure
    £1bn digital infrastructure - 5g mobile & full fiber
    Market-based supply-side policies (specific to UK)

    1. Income tax cuts ​- £12,500 tax free allowance


    40% threshold starts at £50,000

    2. Corporate tax cuts​ - 19% w/plans for 17%

    3. Investment Incentives​ - £1m investment tax free allowance


    Tax relief for small & medium-sized enterprises who engage in R&D

    4. Welfare Reform​ - Welfare caps

    5. Deregulation​ - housing marking planning permission £10bn of red tape cut

    6. Trade liberalisation​ - post-Brexit trade deals

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