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Econ: What are Distributional Effects? 0 Views
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Description:
What are Distributional Effects? Distributional effects is a term describing the various kinds of impact a policy, project, or initiative may have upon various different demographic groups. For example, a rise in interest rates will affect homeowner mortgages, retirees on fixed incomes, students’ college loans, municipalities planning to issue bonds, and a panoply of other unrelated groups.
Transcript
- 00:00
And finance Allah shmoop What are distributional effects All right
- 00:07
people Their economic policies you know things like taxes or
- 00:10
central bank policies Will the impact different groups of people
- 00:14
in different ways These are the distributional effects I eat
- 00:19
the way policies get distributed throughout a population right People
Full Transcript
- 00:24
feel them differently Your town wants to attract more tourists
- 00:27
So the City Council decides to build a museum of
- 00:30
modern macaroni art Mama They need money for construction and
- 00:34
decide to pass a new tax to pay for it
- 00:36
After a lot of debate they enacted ten per cent
- 00:38
tax on all products related to beard maintenance So an
- 00:41
additional ten percent tax is added to all sales of
- 00:44
beard trimmers or beard wax or scented beard oils all
- 00:48
the stuff that a healthy beard needs Obviously this tax
- 00:51
hits some parts of the community harder than others In
- 00:54
general men need These products are whole lot more than
- 00:57
women at least more than most women anyway Also members
- 01:00
of the Civil War generals reenactment society end up paying
- 01:04
more in the beard tax Then the people should look
- 01:07
more like Dolphins swimming club run by Michael Phelps There
- 01:10
Greek Orthodox priests pay it more than members of the
- 01:13
Boy Scouts and so on the different parts of the
- 01:16
population and get distributed effects differently right That's distributional effects
- 01:20
at work Well distributional effects track the way the impacts
- 01:23
of an economic policy gets distributed among individual actors in
- 01:27
an economy and it comes up a lot In real
- 01:30
life central banks have to decide howto handle inflation policy
- 01:34
For example higher inflation helps people who have borrowed money
- 01:37
As wages go up they have more cash to pay
- 01:39
back loans which tend to have had fixed dollar amounts
- 01:43
and set interest rates Meanwhile lenders get better deals when
- 01:46
inflation is low anyway So yeah those were some of
- 01:49
the distributional effects of a country's inflation policies of relating
- 01:52
to the central bank and borrowing money anyway Different groups
- 01:55
are impacted in different ways The distributional effects can also
- 01:59
lead to behavior changes Like when your town's beard tax
- 02:03
went through well it encouraged a whole lot of people
- 02:06
to just shave their beards The Civil War Generals reenactment
- 02:09
society voted twelve the one to cut off their long
- 02:11
luxurious chin decorations and rebrand themselves as the Vietnam War 00:02:15.97 --> [endTime] generals re enactment society Oh
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