The Income Multiplier
Beckenstein, Alan ...
The Income Multiplier
Beckenstein, Alan R.; Appleyard, Melissa M.; Christmann, Petra
BP-0454 | Published August 23, 2001 | 6 pages Technical Note
Collection: Darden School of Business
Product Details
This note provides an overview of fiscal-policy tools and how fiscal policy influences GDP through the income multiplier. The mechanics behind the income multiplier are explained and an algebraic derivation is provided. The note also provides examples of how parameters associated with disposable income (e.g., the tax rate and marginal propensity to consumer) influence the magnitude of the income multiplier.
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