Global Report

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International Macroeconomics
Belgium
Belgium
Target Function : - 0.124 
Belgium
PARAMETERS
Factor
Y1
Y2
∆
GDP
-0.327
-0.264
+0.063
Trade Balance
-0.152
-0.412
-0.260
Unemployment
+0.045
+0.114
+0.069
Government Balance
+0.045
+0.114
-0.312
Prices Rates
-0.078
-0.096
-0.018
Strategy
Increase governments expenditures to improve GDP multiplier. 
Reduce unemployment by public jobs
Increase salaries to lead a increase in income population and consumption
Subsidies for population and companies.
Belgium
High importations which led to a worse trade balance and unemployment. However, GDP increased.
What should have happened
What happened in fact
Aims
Improvement in our Target Function
GDP improvement
Increase Employment rate
Iimprovement in domestic market
Consequences expected
Government Deficit and Inflation
Belgium
Germany
Target function and parameters
Intention
Expansionary policies 
GDP Growth
Unemployment decrease
Observed Impact
Growth in trade deficit (Mostly due to decreased Exports and increase in Imports)
GDP is still negative ( Due to external shocks effects)
Decrease of Price rates
Unemployment rate increased (Due to external shock effects, domestic policy was not effective)
Increase in Corporate Investment due to shock effects (Central bank decreased interest rates)
The policy’s intended and observed impact
UK
YEAR 1
YEAR 2
TARGETFUNCTION
-0.064
-0.038
GDP
-0.114
0.030
UNEMPLOYMENT
0.014
0.004
TRADEBALANCE
-0.080
-0.114
GOVERNMENTBALANCE
-0.049
-0.213
DOMESTIC PRICES
0.087
0.061
Country’s target function and parameter
Country’s target function and parameter
All the aspects worked out the way we intended, but public deficit increased and trade balance decreased
Increase the government expends
Lower tax rates*
Decrease interest rates*
Because of the recession household spending is down and Investment is going down, so the only two yet available to increase domestic demand is G that is easily controlled by the people in the government. 
Increase the public sector salaries
The Gap between policy’s intended effect and observed impact
France
Target function began at a value of -0.024. Our policies were able to increase this function to 0.031.
Factor
Year 1
Year 2
??
% ??
Target function
-0.024
0.031
0.055
2.3
Consumption
0.002
0.025
0.023
11.5
Investment
-0.089
1.690
1.779
0.199
Gov’t spending
-0.130
-0.394
-0.264
-2
Trade balance
-0.082
-0.204
-0.122
-1.5
France
Result:
Corporate investment strategies succeeded in stimulating investment.
Household consumption improved.
Government spending rose. 
Most unexpected? Trade deficit deepened as exports fell and imports rose. 
Economic Aims vs. Actual Effects 
Intent:
Create a cycle of spending in order to positively affect GDP. 
Make goods more internationally competitive by altering real exchange rate via VAT tax and corporate tax rate adjustments. 
Improve market sentiment and stimulate investment.
Italy
Year1
Year2
Targetfunction:
Shockeffects
Domesticpoliciesonly
Othercountrypolicies
Total
0.014
0.000
0.000
0.014
0.051
0.025
0.005
0.082
Corporateinvestments(in %)
0.095
0.659
GDPgrowthrate
-0.179
0.108
Governmentspendings
0.320
0.952
Prices(CPI)
-0.225
-0.456
Trade balance
-0.020
-0.053
Unemploymentrate
0.027
0.060
Value of the country’s target function
Reduce the corporate profit taxe rate to boost the investments made by companies
Reduce household income taxes to rise global consumption
Reduce the household social benefits to limit the government spendings
Our goals
Year1
Year2
Householdconsumption(in %)
0.008
0.011
Domesticdemand(in %)
-0.046
0.139
Corporateinvestments(in %)
0.095
0.659
Governmentspendings
0.320
0.952
Why household comsuption has grown? It’s due to the low inflation rate but the growth is not so important thanks to the fall of the salaries.
Why the corporate investments has grown?
Why the government spendings has fallen down?
Results of our policies
Japan
Recessive policy -> Private sector uses its money to save instead of spending it
Unemployment -> 5.3%
Negative Government balance -> Taxes cant cover government expenses
GDP Growth rate -> 7,5%
Situation
Private sector employment 
-> +2% (decrease unemployment)
Employment social contribution rate(wage) 
-> -2% (stimulate employment)
Corporate subsidy rate 
-> +3% (stimulate employment)
Household income tax rate 
-> +3% (decrease government debt)
Public/private Relative Wage 
-> -3% (stimulate employment)
Changes