An Institute for Government paper explaining how the UK's official forecaster, the Office for Budget Responsibiliy, estimates the impact on demand in the economy of government policies.
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- Pages
- 10
- Published in
- United Kingdom
Table of Contents
- Introduction 2
- What demand effects does the OBR assume policies have 2
- Fiscal multipliers used by the OBR 3
- Annually managed expenditure AME 3
- Capital departmental expenditure limits CDEL 3
- Resource departmental expenditure limits RDEL 3
- Percentage change in demand resulting from three scenarios for increasing CDEL 4
- Percentage point change in GDP growth resulting from the demand effects of three scenarios for increasing CDEL 4
- What affects the size of the demand-side impact of policies 6
- Structural factors 6
- Time-varying factors 6
- The size of the output gap. 6
- Monetary policy. 6
- The type of spending or tax change 7
- Individuals marginal propensity to spend additional income 7
- Crowding out of private sector activity 7
- Trade leakages 7
- Does the OBR ever change its multipliers 7
- Conclusion 8
- Gemma Tetlow 8
- Thomas Pope 8
- References 9
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