# spatchcock/monetary_economics_python

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 # -*- coding: utf-8 -*- # This script describes how truncated and fully compounded fiscal multiplier # scenarios can be consider to be equivalent. It is described in the accompanying # iPython Notebook and at # # http://misunderheard.org/monetary_economics/2017/04/10/modelling_the_fiscal_multiplier/ # # %% import matplotlib.pyplot as plt import numpy as np %matplotlib inline G = 100 # government spending theta = 0.2 # tax rate rounds = 5 # solve equation 1 for the 5th spending round sum_y = G*(1-(1-theta)**(rounds+1))/(1-(1-theta)) print(sum_y) # calculate the total tax paid after the 5th spending round T = theta*sum_y print(T) # solve equation 2 for the 6th spending round y = G*(1-theta)**(rounds) # gross income # subtract the tax paid y_d = (1-theta)*y # disposable income print(y_d) # derive the implied alpha value alpha = (1-(G/sum_y))/(1-theta) print(alpha) # calculate the total income with saving sum_y = G/(1-alpha*(1-theta)) print(sum_y) # calculate the implied savings and tax revenue s = (1-alpha)*(1-theta)*sum_y T = theta*sum_y print(s) print(T)