Tag Archives: fiscal policy

What did John Maynard Keynes get right about economics?

My answer on Quora: Two things: 1) Fiscal Policy Very simply (and very broadly), Keynes established that fiscal policy can play a role in managing aggregate demand. In plain English: government spending (whether it’s increasing or decreasing) can help the economy from getting too hot or too cold. When it is too hot (resources (capital […]

How does the government generate revenue besides collecting taxes?

My answer on Quora: For a given country, you can find the actual breakdown of its government’s revenues in the Statement of Government Operations (p. 38, IMF). This is like the government’s income statement. Some governments might give it different names and some governments might be more transparent than others. A government’s revenues can be grouped into […]

What are economic structural factors?

My answer on Quora: The structural factors of an economy are those that do not change with the economic cycle. There are structural factors and there are cyclical factors. Think of a trend vs. variations around that trend. Structural factors relate to the supply-side of the economy and cyclical factors relate to the demand-side. Structural factors include laws (like […]

What is the best way to reduce inflation in a developing country?

My answer on Quora: There are many ways to try to fight high inflation in developing countries because there can be many sources of high inflation. Ultimately, the key differences between developed and developing economies in the context of fighting high inflation often deal with the effectiveness of monetary policy and any reliance on imports […]