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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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