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My Nation

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Titian
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Post: #11
RE: My Nation

Helsworth Wrote:

Titian Wrote:
this doesn't change anything about the fact that there is not an infinite amount of labour available.
please tell me how you think the real economy can be expanded beyond the natural limits? Noplan

By decreasing the nominal interest and increasing MS - his exports will become more attractive, gross investment will increase (investment in capital goods and inventory). I had once a USA template state which stayed at the same unemployment rate for years straight i.e. 0,27% if I recall correctly, and my economy grew at a fairly decent pace. Low unemployment rate means bigger wages. I was talking about AR, not real life. Real life is far more complex, interacting and multivariate.


Exports need to be produced as well. It may be that you could massively push the attractiveness of your goods to foreign importers by cutting your exchange rate, but what's the use if you cannot satisfy that demand? The shortage in the market would lead to higher prices until the previous equilibrium is reached.
The only result of lowering interest right now is inflation.
Increasing the workforce and labour productivity are the only ways to achieve real economic growth at the moment.

Btw, AR is intented to be a realistic simulation. That's why i only consider the rules of the real world. If these are different from AR, AR might need to change. But I am confident that this is not very often the case.


"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

28.10.2012 17:49
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Helsworth
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Post: #12
RE: My Nation

Automation doesn't require a higher workforce. Because of his strong currency, maybe his exporters have pilled up goods which are just waiting to be sold and shifted off. As long as he keeps having real growth - he beats inflation and real incomes increase.


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This post was last modified: 28.10.2012 18:11 by Helsworth.

28.10.2012 18:07
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Titian
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Post: #13
RE: My Nation

Automation - which also benefits Labour productivity - requires both investment and time. You can't just increase capital infinitely within the short run. Machines and factories need to be build first.
You need investments for doing so and thus sufficient savings.
Lowering the interest rate would lead to a decrease in the saving ratio and thus to lower investments.

You can't bet on there being high stock levels and if there were, producers would rather lower production until these are sold off first.

The real economy can indeed grow as population and productivity increase, but the inflation spiral can destroy a lot of wealth which again will both harm the government's surplus and the people.


"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

This post was last modified: 28.10.2012 21:14 by Titian.

28.10.2012 21:14
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Helsworth
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Post: #14
RE: My Nation

Titian Wrote:
Machines and factories need to be build first.

Or you can import them.

Titian Wrote:
You need investments for doing so and thus sufficient savings.
Lowering the interest rate would lead to a decrease in the saving ratio and thus to lower investments.

His savings ratio is marginally higher than that of the average state, and it's thus, because of MRII. Lower interest means bigger investment. Loans are cheaper to contract, for consumers as well as business. He can have a decent savings ratio with 1% interest.

Titian Wrote:
You can't bet on there being high stock levels and if there were, producers would rather lower production until these are sold off first.

He already has a trade deficit.

Titian Wrote:
The real economy can indeed grow as population and productivity increase, but the inflation spiral can destroy a lot of wealth which again will both harm the government's surplus and the people.

Inflation can be corrected. I believe you also had numerous quarters in many of your states in which you've had high inflation with real growth, and the next quarter negative inflation with real growth. To say that GDP growth stops because of low unemployment is to say that GDP growth stops with high unemployment. Have you played the Russian/Iranian templates? The economy grows while unemployment keeps going upward. Depending on circumstances, you can have increase of productivity regardless of how many are employed. I know your stance on interest in general. I know you're pro usury Hehe
PS: The man is running a USA template state. He would need a huge differential ratio in favor of MS to achieve high currency depreciation.


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This post was last modified: 28.10.2012 22:20 by Helsworth.

28.10.2012 22:17
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gdavis2015
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Post: #15
RE: My Nation

Thanks for all the advice! @Helsworth and @Titian you guys seem to be arguing about increasing or decreasing my intrest rate, so i havent decided what to do with that yet. But, @Titian, you said that i should stabilize my unemployment. Does that mean increasing it?

28.10.2012 22:23
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Titian
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Post: #16
RE: My Nation

*sigh*
ok, shall we do this a little bit more scientifically and step by step?
You are familiar with the NAIRU, aren't you?

Btw, you simply cannot expand the production barrier in the short run by sheer infinite amounts.
And a lower interest rate will benefit consumption at the cost of investment.


PS: I don't really support usury but I am in favour of rational decision making.


@ gdavis
yes - at least I'd do so in real life. I have no idea how the system works exactly and I have no access to past data of your state, but at the moment I think that you will only push inflation further and further by operating at a non sustainable level of real output.


"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

This post was last modified: 28.10.2012 22:29 by Titian.

28.10.2012 22:26
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gdavis2015
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Post: #17
RE: My Nation

Quote:
You are familiar with the NAIRU, aren't you?

Just found out what it is Hmm i guess i should of put in my original post that im a newbie to this... my bad

28.10.2012 22:33
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Titian
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Post: #18
RE: My Nation

gdavis2015 Wrote:

Quote:
You are familiar with the NAIRU, aren't you?

Just found out what it is Hmm i guess i should of put in my original post that im a newbie to this... my bad


oh, nothing to worry about. in fact all of my last post before the '@' was meant as a response to Helsy's last one - you've simply beaten me by a few minutes Zwinker2

EDIT:
But it never harms you to learn a bit about micro and macro economics - in fact it's a lot of fun and one of the most important and useful fields of study out there Jaja


"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

This post was last modified: 28.10.2012 22:39 by Titian.

28.10.2012 22:36
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Helsworth
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Post: #19
RE: My Nation

Titian Wrote:
*sigh*
ok, shall we do this a little bit more scientifically and step by step?
You are familiar with the NAIRU, aren't you?

Btw, you simply cannot expand the production barrier in the short run by sheer infinite amounts.
And a lower interest rate will benefit consumption at the cost of investment.


PS: I don't really support usury but I am in favour of rational decision making.


@ gdavis
yes - at least I'd do so in real life. I have no idea how the system works exactly and I have no access to past data of your state, but at the moment I think that you will only push inflation further and further by operating at a non sustainable level of real output.

Sustainable? lol
Dude we're talking about Ars Regendi. Come back down to earth. MRII has artificially increased his nominal interest rate over night. His savings ratio is 0,4 higher than the average state. His taxation levels are quite mild to medium. His labor time is 10h, and his currency is 0,50 higher than the average state. His GINI is very low, corruption and shadow economy low. He will continue to have real growth. By lowering the nominal interest he's going to stimulate gross investment, consumption and exports via the currency. His state has reserves. He can do as he likes, I for one would not support my central bank of maintaining such a high interest rate, especially when there is no threat of inflation via currency depreciation. How do you think states that chose the employment reform or the special option with the apprenticeship task fare? I'll tell you, nice and smooth if they know how to handle their tasks.
PS: That tough currency is causing private consumption via imports - with time such deficits lead to inflation. http://www.ruthlesscriticism.com/unemployment.htm


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This post was last modified: 28.10.2012 22:51 by Helsworth.

28.10.2012 22:38
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