BA chess set
Macroeconomics assignment
Danish Behal
Right now we are witnessing a struggle between two camps that can be named the “stimulators” and the “austereians.” Both warn that a worldwide depression will occur if governments now make the wrong choices: the stimulators say the danger lies in spending too little and the austereians oppose on spending too much. Each side also has their own economic aspect austerity refers to reduced spending and increased saving in the financial sector by governments to reduce expenditures in an attempt to shrink their growing budget deficits. which was seen clearly post economic crisis of 2008 in most of European countries. Who tried to follow the successful use of austerity used by Canada previously. Success of liberal prime minister Jean Chretien 's "bloodbath budget" of 1994. When Chretien took his position in 1993, the country was in very poor economic shape. By the following year, the budget deficit was running at around 9% of GDP, and gross debt had reached more than 100% of GDP. So Chretien and his finance minister Paul Martin took a tough approach of, cutting government spending by 15% in real terms between 1994 and 1995, from all areas - including health and education. Thousands of people and especially in the public sector lost their jobs. But the risk paid off. The budget was brought back into surplus in only three years, while booming private sector more than made up for the losses in government jobs( BUT REMEMBER Canadian step was successful in completely different environment to that of today. The global economy was strong, including the neighbouring US, which boosted consumer demand.)
.whereas stimulus refers to attempts by governments to financially stimulate an economy. An economic stimulus is done by use of monetary or fiscal policy, using tactics such as lowering interest rates, increasing government spending and quantitative easing. In easy words injecting money in economy. which was attempted by America to
Danish Behal
Right now we are witnessing a struggle between two camps that can be named the “stimulators” and the “austereians.” Both warn that a worldwide depression will occur if governments now make the wrong choices: the stimulators say the danger lies in spending too little and the austereians oppose on spending too much. Each side also has their own economic aspect austerity refers to reduced spending and increased saving in the financial sector by governments to reduce expenditures in an attempt to shrink their growing budget deficits. which was seen clearly post economic crisis of 2008 in most of European countries. Who tried to follow the successful use of austerity used by Canada previously. Success of liberal prime minister Jean Chretien 's "bloodbath budget" of 1994. When Chretien took his position in 1993, the country was in very poor economic shape. By the following year, the budget deficit was running at around 9% of GDP, and gross debt had reached more than 100% of GDP. So Chretien and his finance minister Paul Martin took a tough approach of, cutting government spending by 15% in real terms between 1994 and 1995, from all areas - including health and education. Thousands of people and especially in the public sector lost their jobs. But the risk paid off. The budget was brought back into surplus in only three years, while booming private sector more than made up for the losses in government jobs( BUT REMEMBER Canadian step was successful in completely different environment to that of today. The global economy was strong, including the neighbouring US, which boosted consumer demand.)
.whereas stimulus refers to attempts by governments to financially stimulate an economy. An economic stimulus is done by use of monetary or fiscal policy, using tactics such as lowering interest rates, increasing government spending and quantitative easing. In easy words injecting money in economy. which was attempted by America to
References: Sloman, J (2012) Economics: Eight Edition Frankel, J (2012) Fiscal austerity vs. Fiscal Stimulus http://www.voxeu.org/article/procyclicalists-fiscal-austerity-vs-stimulus Debating Europe (2012) Austerity versus Growth? http://www.debatingeurope.eu/growth/austerity-versus-growth/ Austerity Vs. Stimulus: The New Ideological Divide: http://www.forbes.com/sites/greatspeculations/2010/06/29/austerity-vs-stimulus-the- new-ideological-divide/ the multiplier: http://www.economicshelp.org/blog/6139/economics/why-did-europe-expect-fiscal-consolidation-to-work/ Paul Krugman on Austerity: http://www.nytimes.com/2010/06/18/opinion/18krugman.html?ref=paulkrugman&_r=2&