In Keynesian economics, the transfer payments multiplier (or transfer payment multiplier) is the multiplier by which
aggregate demand will increase when there is an increase in transfer payments (e.g., welfare spending, unemployment payments).[1] Transfer payments are not in the same theoretical category as government spending on goods and services because such payments are not directly injected into a goods market. Instead, the spendable funds are transferred to a member of the public, who then may spend some or all of them. For this reason, transfer payments are analyzed as negative taxes, and their multiplier is usually considered to be equal in magnitude but opposite in sign (specifically positive rather than negative) from that of taxes.
One dollar of transfer payments results in up to one dollar of spending by the recipient. In turn, the recipient of that spending has experienced an increase in income and spends a portion of it on more goods, giving the next person income some of which is spent, etc. The result of this chain reaction may be that aggregate spending, and hence equilibrium GDP, has gone up by more than the original dollar. However, the size of this multiplier effect is likely to be diminished by two considerations: first, an upward push that the new spending gives to interest rates, which diminishes spending on goods such as physical capital and consumer durables; and second, an upward push that the spending gives to the general price level, which diminishes the quantity of aggregate demand for several reasons [citation needed].
Because not all the original dollar is necessarily spent by the recipient of the transfer payment, the resulting multiplier is likely to be somewhat less than the multiplier of government spending on goods and services.
^Macdonald, Nadia Tempini (1994). Macroeconomics and business. p. 138. ISBN 1-86152-450-1.
and 26 Related for: Transfer payments multiplier information
In Keynesian economics, the transferpaymentsmultiplier (or transferpaymentmultiplier) is the multiplier by which aggregate demand will increase when...
Canada's transferpayments originated in the British North America Act (1867)'s Sections 118 as provincial subsidies. By 1907, these payments were altered...
In economics, the fiscal multiplier (not to be confused with the money multiplier) is the ratio of change in national income arising from a change in government...
in return. transferpaymentsmultiplier The multiplier by which aggregate demand will increase when there is an increase in transferpayments (e.g., welfare...
economy with zero marginal taxes and zero transferpayments. If these figures were substituted into the multiplier formula, the resulting figure would be...
Where used, IBANs have reduced trans-national money transfer errors to under 0.1% of total payments The IBAN consists of up to 34 alphanumeric characters...
include payment to income (mortgage payments as a percentage of gross or net income); debt to income (all debt payments, including mortgage payments, as a...
According to the money multiplier theory, which is often cited in macroeconomics textbooks, the central bank controls the money multiplier because it can impose...
(Bewertungsgesetz) with the real property tax rate and with the applicable municipal multiplier. The real property property tax rate is set by the Federal state, in which...
minimum payment option for automatic and manual payments and focusing on the total debt may mitigate the unwanted consequences of default minimum payments. In...
spillover effects for non-recipients. Co-authors estimate a local transferpaymentsmultiplier greater than 2. These results were covered in The Washington...
call center services, international holders and parcel services and multiplypayments services. The history of the group started with IATA agency. The first...
Socioeconomics – Specialization (functional) – Spending multiplier – Stagflation – Standard of deferred payment – Standard of living – Stock exchange – Store of...
education systems, pensions for the elderly, unemployment benefits, transferpayments, subsidies and public transportation. Energy, water and waste management...
and pay payment instruments. This enables banks to economise on reserves held for settlement of payments since inward and outward payments offset each...
regularly receive a minimum income in the form of an unconditional transferpayment, i.e., without a means test or need to work. In contrast a guaranteed...
EWCA Civ 2618. Certain payments made to a director/shareholder had been treated by the High Court as quantum meruit payments to Hale in his capacity...
be fulfilled if the financial institution becomes insolvent. The money multiplier theory presents the process of creating commercial bank money as a multiple...
disability, un-reimbursed medical expenses, health insurance, annuity payments and payments of IRS levies, all of which must meet certain stipulations. The...
current transferpayments are not explained here. Net interest and miscellaneous payments are interest paid minus interest received plus payments to individuals...
for the sending and receiving of domestic inter-bank electronic funds transfer since June 1, 2004. The CLABE replaces the Mexican account numbering scheme...
acquisition of property which passes on the death of any person, by means of a transfer from one person (called the predecessor) to another person (called the...
Keynes in 1936, who used it to develop the notion of a government spending multiplier. Its simplest form is the linear consumption function used frequently...
offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally...
Global Information