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Sudden economic death spiral

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VineFynn
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Post: #1
Sudden economic death spiral

My state Fynland has been experiencing double digit negative growth every year for a while now. It started after I increased the income tax by two percentage points, but has gotten worse since I decreased it.

What does it mean? Is it something to do with a supply shock, that my country was growing at all? Was lots of debt accumulating jn the private sector somehow and I wasn't noticing?


I'm leaving and probably never coming back, so thanks for the interesting discussions I guess, dunno why im writing this nobody even irl gives a toss about me anyway
26.08.2016 02:49
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Lord Alexander
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Post: #2
RE: Sudden economic death spiral

I strongly suspect that this economic depression is caused by the Project that is too costly for the economy of Fynland.

However, I do not know if the economic depression of such severity is a bug or it is a "normal" response of the matrix at the situation, when the ratio between the spending on PE projects and the size of GDP is not the one that Malone and/or Sheep find preferable.

26.08.2016 05:39
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VineFynn
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Post: #3
RE: Sudden economic death spiral

Lord Alexander Wrote:
I strongly suspect that this economic depression is caused by the Project that is too costly for the economy of Fynland.

However, I do not know if the economic depression of such severity is a bug or it is a "normal" response of the matrix at the situation, when the ratio between the spending on PE projects and the size of GDP is not the one that Malone and/or Sheep find preferable.


Hm. That seems very arbitrary (not your assertion, the design choice). The project was begun before said spiral happened- indeed, the size of the GDP (and the deficit size) improved relative to the project before it collapsed. Is this an attempt to simulate creditors refusing to finance debt?


I'm leaving and probably never coming back, so thanks for the interesting discussions I guess, dunno why im writing this nobody even irl gives a toss about me anyway

This post was last modified: 26.08.2016 06:57 by VineFynn.

26.08.2016 06:55
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MrProper
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Post: #4
RE: Sudden economic death spiral

Lord Alexander Wrote:
I strongly suspect that this economic depression is caused by the Project that is too costly for the economy of Fynland.

Likely that. But the pretty high nominal interest 7.27% should not be ignored either; On one hand borrowing money in your state is very expensive and unatractive for people who require capital for founding a company. On the other hand companies in a crisis are more likely to go brankrupt.

And, maybe, not all tasks were solved ideally. Like that one:
In public calls for tenders always the cheapest competitor gets the contract.


冥王星違法です

This post was last modified: 26.08.2016 07:18 by MrProper.

26.08.2016 07:15
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VineFynn
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Post: #5
RE: Sudden economic death spiral

MrProper Wrote:
Likely that. But the pretty high nominal interest 7.27% should not be ignored either; On one hand borrowing money in your state is very expensive and unatractive for people who require capital for founding a company. On the other hand companies in a crisis are more likely to go brankrupt.

And, maybe, not all tasks were solved ideally. Like that one:
In public calls for tenders always the cheapest competitor gets the contract.


I didn't set the interest rate- it got higher automatically as the economy grew- is it liable to just set off a depression itself?


I'm leaving and probably never coming back, so thanks for the interesting discussions I guess, dunno why im writing this nobody even irl gives a toss about me anyway
26.08.2016 08:03
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MrProper
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Post: #6
RE: Sudden economic death spiral

VineFynn Wrote:
I didn't set the interest rate- it got higher automatically as the economy grew- is it liable to just set off a depression itself?

In industrial countries (turkey template), the interest rate is high from the beginning. I usually lower it and achieve pretty good results with that.

Your question itself is tricky: Nobody knows the actual implementation of the economical models in Ars Regendi. In general, I would recommend additional reads since this topic is a complex matter. However, I do not have much doubts that a very high interest can trigger an economical crises, or at least make a crises worse if not adjusted properly.


冥王星違法です
26.08.2016 09:43
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