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The social multiplier effect is a term used in economics, economic geography, sociology, public health and other academic disciplines to describe certain social externalities. It is based on the principle that high levels of one attribute amongst one's peers can have spillover effects on an individual.
For example, if an increase in German government spending by €100, with no change in tax rates, causes German GDP to increase by €150, then the spending multiplier is 1.5. Other types of fiscal multipliers can also be calculated, like multipliers that describe the effects of changing taxes (such as lump-sum taxes or proportional taxes ).
The local multiplier effect (sometimes called the local premium) is the additional economic benefit accrued to an area from money being spent in the local economy. The concept has been taken up by advocates for "spend local" campaigns in addition to more formal treatments in the area of regional economic development .
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The multiplier effect has been used as an argument for the efficacy of government spending or taxation relief to stimulate aggregate demand. In certain cases multiplier values less than one have been empirically measured (an example is sports stadiums), suggesting that certain types of government spending crowd out private investment or ...
This example shows us how the multiplier is lessened by the existence of an automatic stabilizer and thus helping to lessen the fluctuations in real GDP as a result of changes in expenditure. Not only does this example work with changes in T , it would also work by changing the MPI while holding MPC and T constant as well.
Many economists have attempted to estimate the multiplier effect of military expenditures with mixed results. A meta-analysis of 42 primary studies with 243 effect size , which are aggregated results from multiple studies, found that military expenditures tend to have positive effects on economic growth in developed countries but generally ...
Bid Rent Theory was developed by William Alonso in 1964, it was extended from the Von-thunen Model (1826), who analyzed agricultural land use. The first theoretician of the bid rent effect was David Ricardo. It states that [2] different land users will compete with one another for land close to the city centre.