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Developments in Economics & Business Education 1-2 September 2005. Using the Virtual Chancellor Simulation John Houston & Anne Gasteen Economics’ Research Group, Caledonian Business School, Glasgow Caledonian University [email protected] [email protected]

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developments in economics business education 1 2 september 2005
Developments in Economics & Business Education1-2 September 2005

Using the Virtual Chancellor Simulation

John Houston & Anne Gasteen

Economics’ Research Group, Caledonian Business School, Glasgow Caledonian University

[email protected] [email protected]

using the virtual chancellor simulation

Using the Virtual Chancellor Simulation

Context : Level Three Macro theory module (IS-LM-FE; DAD-SAS)

But can be used at almost any level (incl. School)

Web-based: http://www.virtual-worlds.biz/vwc/ (now reasonably reliable)

Parameterized for the UK Economy

‘Black Box’ but free to use

quick run 1
Quick Run [1]

1. Can change any combination of these four variables

2. Submit to the ‘Black Box’

…. or get back to the starting values

quick run 2
Quick Run [2]
  • Increase basic rate of tax from 22% to 25%

Net weekly effect on sample households

Effect on key Macro aggregates

full er run 1
Full(er) Run [1]
  • Can change:
  • Income Tax, National Insurance & Spending Taxes
  • Government Spending on : Defence, Education, Law & Order and Health
  • Base Rate
full er run 2
Full(er) Run [2]

Appears only to affect macro aggregates, but not households

full er run 3
Full(er) Run [3]

Tabular & Graphical Output

full er run 4
Full(er) Run [4]

Analysis of effects on the sample households

demo 2005 budget measures

Demo : 2005 Budget Measures

Personal Allowance = £4,895

Income Tax Basic Rate = 22%

Starting rate = 10%, Higher rate = 40%)

National Insurance = 11%

Between lower and upper earnings limits (£94 - £630 pw)

above upper earnings limit: 1%

VAT Standard Rate = 17.5%

Reduced Rate 5% (8% in model)

demo 2005 budget measures1
Demo : 2005 Budget Measures
  • Govt spending:
    • Public Order & Safety = £31bn => 82.35% increase
    • Defence = £28bn => 6.67% reduction
    • Health = £90bn => 20% increase
    • Education = £68bn => 13.33% increase
  • Basic Rate of Interest = 4.5% (reduction of 0.25%)
our use of vc at gcu
Our use of VC at GCU
  • Three, one-hour supervised computer labs
      • Introduce - ‘Quick Run’
      • Altering Direct & Indirect Tax Rates/Allowances
      • Altering Government Spending & Interest Rates
  • Students attempt exercises throughout, considering the impact upon:
      • Households (several representative types)
      • Macroeconomic Aggregates
  • Assessable Coursework
      • Replicate, as far as possible, the most recent Budget & Autumn Statement
      • Individually, or in teams, depending upon scope & abilities
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