Multiple factors will come into play, from effective tax rate calculations to consumer impact to how companies will put to use the expected windfall they'll receive from a sharp reduction in their currently highest - in - the -
world nominal rates.
Not exact matches
While it's true that the U.S. business tax
rates are among the highest in the
world, there are so many breaks available to large businesses that the actual tax
rate (for the big guys, at least) is often
nominal.
While there are some signs of recognition such as the Fed's reduction in its estimated neutral
rate from 4.5 percent to 3.0 percent during the last 2 years, the IMF's explicit use of the term secular stagnation in its
World Economic Outlook, ECB president Mario Draghi's call for global coordination and greater use of fiscal policy, and Japan's indicated interest in fiscal - monetary cooperation, policymakers still have not made sufficiently radical adjustments in their world view to reflect this new reality of a world where generating adequate nominal GDP growth is likely to be the primary macroeconomic policy challenge for the next de
World Economic Outlook, ECB president Mario Draghi's call for global coordination and greater use of fiscal policy, and Japan's indicated interest in fiscal - monetary cooperation, policymakers still have not made sufficiently radical adjustments in their
world view to reflect this new reality of a world where generating adequate nominal GDP growth is likely to be the primary macroeconomic policy challenge for the next de
world view to reflect this new reality of a
world where generating adequate nominal GDP growth is likely to be the primary macroeconomic policy challenge for the next de
world where generating adequate
nominal GDP growth is likely to be the primary macroeconomic policy challenge for the next decade.
There is a growing sense that the
world is demand short — that the real interest
rates necessary to equate investment and saving at full employment are very low and may be often unattainable given the bounds on
nominal interest
rate reductions.
Also look at the TIPS -
nominal spread and note how the real interest
rate is rising around the
world and particularly in the US.
Now, talking about what is specifically happening with the US dollar, it might be interesting for people to look at the data provided by the
World Bank, in which the
World Bank provides the ratio between purchasing power parities and
nominal exchange
rates of countries, comparing it with the US dollar.
CEOs are locked in a stalemate with Washington lawmakers over what tax
rate the money should carry if it is brought to the country with thehighest
nominal corporate levy in the developed
world.
Of course that 25.6 % number is still quite a bit lower than the
nominal tax
rate of 35 %, the highest in the
world behind only Japan.
Now, we're sympathetic to the idea that prospective real growth and inflation may be sufficiently lower in the future to place us into a low
nominal growth
world, which would also justify lower equilibrium interest
rate levels.
In real -
world situations, such as evaluating the life of a mortgage contract, finding the effective interest
rate requires knowing the principal amount, or the amount to be financed; the
nominal interest
rate; any additional loan fees or charges; the number of times each year the loan is compounded; and the number of payments to be made each year.
But since we live in a «here and now»
world,
nominal rates are what we deal with to move forward.
In today's Zero Lower Bound
world, central banks have effectively set
nominal interest
rates as very close to nothing.