Contemporary Economic Policy and the Virtual Chancellor Simulation

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Contemporary Economic Policy
Assignment: Virtual Chancellor

Introduction
The Virtual Chancellor Simulation is a web site designed to give to anyone the power to control for a moment the keys of the economic growth model of his\her country and try according to them, by changing the suitable parameters, to lead the economy to its own prosperity.
However it is not an easy thing to be in that position, because you have to take under consideration a lot of variables and risks and you have to satisfy every level of the society, from the poor families and pensioners to the rich people and of course the goals set by the government.
After running the model approximately three hundred times to see what changes each parameters have and what they affect I finally found out that to increase Gross National Product, decrease government dept, decrease the current account deficit and reach socially sensible effects on families I had mostly to make changes on macroeconomics variables section and on Indirect Taxes section.
Findings
As I mentioned above the main parts that I used and they gave the required results were Macro Variables and Indirect Taxes however I did tried to change the variables of Income Tax section but they were keep giving me results that were not meeting my expectations.
First of all I tried to increase the general Personal Allowance from 4895 to 5500 and the Personal Allowance for people aged 65-74 from 7090 to 9000. I was expecting to have effect on families ( most significant was that of Couple Pensioners which gain 11.40 € ) and decrease the inflation ( by 0.30 points ) as it happened but I was not expecting the significant increase in percentages of government debt ( by 0.51% ) and the decrease of the exchange rate index ( by 0.18 points ). As a result these changes decrease in the following years unemployment by average 0.11 % per annum and had a significant rose in the growth of GDP by average 0.18 % per annum (those % are the difference between



References: http://en.wikipedia.org/wiki/Keynesian_economics (Accessed 12/02/2012)

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