Transcript John Houston`s PowerPoint presentation

Developments in Economics & Business
Education
1-2 September 2005
Using the Virtual Chancellor Simulation
John Houston & Anne Gasteen
Economics’ Research Group, Caledonian Business
School, Glasgow Caledonian University
[email protected] [email protected]
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Using the Virtual Chancellor
Simulation
•Context : Level Three Macro theory module
(IS-LM-FE; DAD-SAS)
But can be used at almost any level (incl.
School)
•Web-based: http://www.virtualworlds.biz/vwc/ (now reasonably reliable)
•Parameterized for the UK Economy
•‘Black Box’ but free to use
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Menu
Commands
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Quick Run [1]
1. Can change any
combination of these four
variables
2. Submit to the
‘Black Box’
…. or get back to the
starting values
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Quick Run [2]
•Increase
basic rate of
tax from
22% to 25%
Net weekly
effect on
sample
households
Effect on
key Macro
aggregates
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Full(er) Run [1]
• Can change:
Income Tax, National Insurance &
Spending Taxes
Government Spending on : Defence,
Education, Law & Order and Health
Base Rate
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Full(er) Run [2]
Appears only to affect
macro aggregates, but
not households
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Full(er) Run [3]
Tabular &
Graphical
Output
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Full(er) Run [4]
Analysis of effects on the
sample households
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Demo : 2005 Budget Measures
•Personal Allowance = £4,895
•Income Tax Basic Rate = 22%
–Starting rate = 10%, Higher rate = 40%)
•National Insurance = 11%
–Between lower and upper earnings limits
(£94 - £630 pw)
–above upper earnings limit: 1%
•VAT Standard Rate = 17.5%
–Reduced Rate 5% (8% in model)
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Demo : 2005 Budget Measures
• Govt spending:
Public Order & Safety = £31bn => 82.35%
increase
Defence = £28bn => 6.67% reduction
Health = £90bn => 20% increase
Education = £68bn => 13.33% increase
• Basic Rate of Interest = 4.5% (reduction
of 0.25%)
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Our use of VC at GCU
• Three, one-hour supervised computer labs
 Introduce - ‘Quick Run’
 Altering Direct & Indirect Tax Rates/Allowances
 Altering Government Spending & Interest Rates
• Students attempt exercises throughout,
considering the impact upon:
 Households (several representative types)
 Macroeconomic Aggregates
• Assessable Coursework
 Replicate, as far as possible, the most recent Budget &
Autumn Statement
 Individually, or in teams, depending upon scope & abilities
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