Contemporary Economic Policy and the Virtual Chancellor Simulation

1103 Words5 Pages
Contemporary Economic Policy
Assignment: Virtual Chancellor

Introduction
The Virtual Chancellor Simulation is a web site designed to give to anyone the power to control for a moment the keys of the economic growth model of his\her country and try according to them, by changing the suitable parameters, to lead the economy to its own prosperity.
However it is not an easy thing to be in that position, because you have to take under consideration a lot of variables and risks and you have to satisfy every level of the society, from the poor families and pensioners to the rich people and of course the goals set by the government.
After running the model approximately three hundred times to see what changes each parameters have and what
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I moved on to Indirect Taxes trying to understand how changes of the excite duties such as alcohol, tobacco and petrol are affecting the economy and the families.
Soon I realize that increasing tobacco duty (from 205.0 per packet of 20 to 215.0 per packet of 20 ) and tobacco ad valorem duty ( for example by one percentage point ) has an enormous effect on inflation (increased by 0.28 ) and of course most of the people of the society now are losing and GNP goes down as well. In general the main variable that was affected positively was now the government dept that was falling by 0.11 % but in contrast with that unemployment was rising and there was a negative growth in GDP.
Similar results appeared when I increase the petrol duty (from 48.0 pence per liter to 52.0 pence per liter ) It was obvious that government dept was falling faster now ( by 0.16% ) however the inflation was up 0.41 points and GNP was falling significantly by 0.85 bn €.
On the other hand when I decreased tobacco duty ( from 205.0 per packet of 20 to 195.0 per packet of 20 ) and tobacco ad valorem duty ( for example by one percentage point ) it had positive effects on inflation dropped down by 0.28 points and on GNP ( increased by 0.57 bn ) but affected negatively the government dept by increasing it 0.11%. The
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