automatic fiscal stabilizers Archive

Bank earnings as a demand leakage

All unspent income is called a ‘demand leakage’ as it means the output can’t get sold unless another agent spends more than his income. (by identity, not ‘theory’) And unsold output leads to cuts in output, cuts in employment, etc. etc. and down you go until some agent spends enough more than ...Read More

U.K. Construction Grew Fastest in Eight Months in February

While the austerity measures will bite, in the UK, like much of the world, automatic fiscal stabilizers (rising transfer payments and lower tax revenues) got their deficits up high enough to reverse the downturns in GDP, and deficits remain high enough for modest growth. The UK had weather issues in December, which ...Read More