A fiscal multiplier is a ratio that measures the changes in national income and compares this with the spending of the government that caused the change. The fiscal multiplier helps in analyzing...

fiscal multipliers Prof comment : What are fiscal multipliers? What is their significance? Tania comment : Fiscal multipliers are ratios that reflect the change in a nation’s income as it pertains to government spending – i.e. fiscal policy. The multiplier measures the effect on income levels of the country in question. The idea is that increased fiscal spending leads to more consumption hence creating a cycle for wealth and consumption.According to Fatas’ article – Underestimating Fiscal Policy Multipliers – the multipliers are quite significant in evaluating economic growth and strategy. If the multiplier yields zero or lower, the private demand is greatly reduced. The idea is if the multiplier is overestimated in its growth prediction, the demand will be mismanaged. Prof comment : Not bad, but can someone come up with a clearer definition? In other words the multiplier is a measure of what? What does it tell us? Does it explain why some eurozone countries (and also the UK) are doing so badly compared to the U.S.? KHaled A. comment : A fiscal multiplier is a ratio that measures the changes in national income and compares this with the spending of the government that caused the change. The fiscal multiplier helps in analyzing spending of governments and how it affects the national income of a nation. Furthermore, consumer, investment and foreign spending have an effect of the fiscal multiplier. The fiscal multiplier is used to compare the performance of nations like Euro zone countries. Some Euro zone countries like Spain and Italy are doing poorly because their national income and government spending are not properly co-coordinated. The nations in the euro zone are facing a liquidity crisis and a solvency crisis, as well. A nation like Greece is facing a debt crisis that cannot be sustained by the nation. Prof comment : Good, but keep this thread on the subject of the multipliers, the impact of austerity, etc. The first thread deals with the subject of...