Time Lags In Fiscal Policy

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Time Lags and the Multiplier Effect

Overview

Discretionary fiscal policy is far from perfect because there are oftentimes significant and unpredictable time lags involved, and the magnitude of a particular policy tool on Gdp is often hard to predict considering of multipliers. Having said this, time lags and multipliers have been observed over fourth dimension and are fairly well understood even if not always perfectly anticipated. Time lags refer to the fact that discretionary fiscal policy tools used by governments accept time to generate the targeted counter-cyclical results. Multiplies hateful that the amount of fiscal stimulus needs to be carefully calibrated in terms of the targeted effect.

Fundamental learning objectives :

Explain time lags, as well equally how and why fourth dimension lags can affect the implementation of discretionary financial policy
Explicate how multipliers tin can affect the authority of discretionary fiscal policy

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Expert

Tim Hall

Tim has nearly 30 years of feel in the international majuscule markets at major global institutions and has worked both on the buy-side and the sell-side. He has worked with numerous companies, banks and governments in developed and emerging markets on investment grade and high yield bail issues, from directly-frontwards to very complex acquisition/leveraged financings. Tim has also been on the board of a UK "challenger banking company." Tim has an MBA from the Wharton School, and is a CFA.

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