# Economy

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Economy interface

Economics in EU4 revolves around the earning and expenditure of ducats, the game's international currency. The national and international economy underpin almost every function of a country, and often fuels international diplomacy. Understanding and developing a country's economy yields better national finances, allowing the country to boost its standing in the world and further grow at a faster pace.

The Economy panel in the Country interface displays a summary of the player's finances and provides a few important actions relating to it (such as Loans and Reduce Inflation).

## Overview

The total amount of ducats in a country's treasury is updated at the beginning of every month. The amount by which this changes is the total income minus the expenditure for the previous month. The various factors which affect these amounts are listed below. In addition, various events may add or take away from the treasury.

Aside from the continuing incomes and expenses mentioned below, ducats may also be gained or spent as one-time earnings or payments in the following ways:

Earnings:

• Treasure fleets
• Estate interactions
• Receiving gifts and loans from other countries through diplomacy
• Siphon income from a junior partner in a personal union

Expenditures:

• Constructing buildings
• Estate interactions
• Hiring and salary costs for advisors
• Recruitment costs for land and naval units
• Providing gifts, subsidies, and loans to other countries through diplomacy
• Supporting rebels in another country through espionage
• Paying another country to share knowledge
• Embracing institutions

## Income

The "Income" column lists regular streams of income, and effect by modifiers plus efficiency (in grey, middle column).

Income is the sum of all money gained monthly. Unlike in EU3, all income is liquid and does not need to be minted. The continuous sources of income that a country has is listed in the "Income" column, which is on the left side of the Economy panel (see right). This panel lists both the total amount from each source and that source's bonus (if any). Hovering over the source or bonus shows a tooltip with detailed information, such as modifiers or a breakdown of income by province.

The maximum amount of ducats a country can have in its treasury is 1 million. However, this number is considered to be difficult to reach without using console commands or mods.

### Taxation

Main article: Tax

Tax comes directly from the population of a province, and produces a relatively dependable baseline income. Each province has a base tax (which may be increased by spending administrative power), and a tax income efficiency. The yearly province tax amount is the multiple of the two amounts. There is also a National Tax Income, that is calculated at a countrywide level. Various tax modifiers exist that may change this amount.

### Production

Main article: Production

Production is a measure of the amount of income generated in a province by local producers of its trade good. Unlike in EU3, production income is added directly to the state's income each month. This amount depends on the good's prices, the province's base production, and the production efficiency (among other modifiers).

The trade value produced by each province flows into the trade network, where it is eventually collected by capitals and merchants and converted into ducats. Careful management of trade can make it the most powerful source of income by far, which makes control of trade-important provinces instrumental for a long-term increase of a nation's economical power.

### Gold

Gold is a special "trade" good. Gold does not produce any trade value; instead, it is converted directly into ducats. Gold production income is 40 ducats per year per unit produced, with the exception of unreformed New World natives, who only receive 1 ducat per year per unit produced. Income from gold causes inflation per year equal to half its proportion of the country's income; at 100% income the country's inflation would increase by 0.50% per year.

#### Treasure fleet

Colonial nations with gold provinces will not receive the income of gold for themselves, but instead will store it in a ‘Treasure Fleet Counter’ that counts up towards a certain sum depending on the size of the colony’s gold mines. Once the counter is full, the colony will send a treasure fleet. The treasure fleet travels downstream along the trade routes, passing each node between the colonial nation and its overlord's trade capital. If there are privateers present in these nodes, they will steal a share of the gold corresponding to their power in the node. At the end of the journey, any money that remains is given to the overlord nation, which will suffer inflation similar to that gained from gold mines.

Nations who do not have their trade capital downstream of their colonies’ trade nodes will be unable to receive treasure fleets. In these cases, the colonial nation will simply keep the gold for themselves, paying just the usual amount in tariffs.

### Tariffs

Main article: Tariffs

Colonial nations are required to transfer a part of their total income, called tariffs, to their overlord. At their formation, this amount is 10% of their income. The tariffs can be set for each colonial nation by the overlord in the Subjects interface or may change through events. Higher tariffs increase the level of Liberty desire in the colonial nation.

### Vassals

Main article: Income from vassals

Vassals are required to pay a fee to their overlords. The basis for calculating this fee is the tax income of the vassal. The amount that must be paid is modified by the ‘vassals tax efficiency’ of the overlord, which is influenced by the overlord's legitimacy, among other factors. Apart from the fee, vassals may be requested to give all of their trade power to their overlord. While this action will increase their liberty desire by 30 %, this may boost significantly the overlord's trade income, especially if he has better trade efficiency.

### Harbor fees

Signing a fleet basing agreement with another country will cost an amount equal to 0.1ducats[1] per month for every port belonging to the other country with a minimum of 0.5ducats and maximum of 2.0ducats per month.

The AI never asks to access ports of the player, and the player can never offer it (there is a -1000 "strategic interests" modifier). Whether the province is cored or not has no effect on the cost of fleet basing rights.

### Subsidies

Main article: Diplomacy § Give subsidies

Countries that have a strategic interest in another country may grant subsidies to that country, which is given in the form of a certain amount of the benefactor's monthly income each month for a certain number of years.

### Spoils of war

The Spoils of War section includes income gained from military and wartime actions. This includes:

• Looting: Looting occurs when a province (either occupied or besieged) has hostile units stationed in it. Each province has a loot bar that depletes based on the amount that the army can loot every month.
• Privateering: A country can send their light ships on missions to Privateer in certain sea zones, aiding pirate nations in exchange for a portion of their earnings.

### War Reparations

A country has the option to demand 10% of an enemy's income for 10 years as part of a peace deal.

### Condottieri

It is possible to offer a country Condottieri, which are armies rented out for money. Note that, in the event that the contractor is a player-controlled country, the army will stay under the control of the AI.

### Knowledge Sharing

Main article: Diplomacy § Knowledge Sharing

A country may offer other countries progress in institutions they haven't yet embraced. This costs 10% of their monthly income, which they pay direct to the country that's sharing. Only one knowledge sharing agreement may be made at a time.

## Expenses

The "Expenses" column showing major payments and maintenances.

A country's expenses, i.e., its monthly continuous payments, is similarly listed in the Expenses column on the right side of the Economy panel. This column lists two types of expenses:

• Automatic expenses: These are expenses which are automatically deducted from the treasury. They cannot be modified from the Economy panel, simply viewed (except for Interest, which may be changed through the Loans interface).
• Adjustable expenses: These expenses are shown with sliders, to adjust the amount being spent monthly on them. Changing these expenses using the sliders will have an impact on the action being done or the asset being maintained.

Main article: Advisor cost

Advisors have a base monthly salary equal to the square of their skill level, increased by 0.5% per game year since 1444. Hovering over this in the Expenses column shows a tooltip that lists other modifiers, including Inflation.

### State maintenance

Main article: State maintenance

States require continuous monetary upkeep, depending on the development of the provinces, the distance to the capital and further modifiers.

### Interest

Main article: Loans

Interest must be paid on loans. The default interest rate is 4%, which may be changed by modifiers. Further information is given in the Loans section below.

### Diplomatic expenses

Diplomatic expenses.

Hovering over Diplomatic Expenses shows a tooltip with a more detailed breakdown of a country's diplomatic expenses (see right). These are as follows:

• Subsidies: Ducats sent monthly to other countries as subsidies, if any.
• Vassal fee: If the country is a vassal, the amount of vassal fees sent to their overlord.
• Outgoing tariffs: If the country is a colonial nation, the amount of ducats paid to their overlord as tariffs.
• War reparations: Amount paid to winners of previous wars (usually 10% of income for 10 years). See war reparations for more details (Requires Art of War DLC).
• Support loyalists: Amount spent to junior partners in Personal unions to reduce their Liberty desire.
• Send officers: Amount sent to marches to reduce their liberty desire and provide a bonus to their armies.
• Knowledge sharing: Amount sent to subjects to spread institutions. (Requires Rule Britannia DLC).
• Condottieri fees: Amount paid to other countries as rent for Condottieri (requires Mare Nostrum DLC).

### Fort maintenance

Main article: Forts

This shows the amount spent monthly to maintain the forts present in a country. The amount spent on each fort depends on its fort level. Forts can be mothballed while at peace to reduce their maintenance by a -50% modifier. Doing so will inhibits the forts upkeep of army tradition and remove the defenders making it easy to conquer in a war. Further modifiers are granted by ideas and policies among others.

### Colonial maintenance

Main article: Colonial maintenance

Colonies require a monthly maintenance while they grow until they become full cities. The cost per year is$\text{cost per year} = \left( 24 + \frac{\text{total development}}{4} \right)$

So, the cost per month is roughly$\text{cost per month} = \left( 2 + \left( \text{total development} \cdot 0.02 \right) \right)$

Thus, a 5 development province will cost about 2.10 ducats per month to colonize, while a 6 development province will cost 2.12ducats per month. The cost is further increased quadratically for each colony over the number of colonists the country has. Colonial maintenance can be reduced, but at the cost of colonial growth. Provincial modifiers to colony growth are applied separately to this change. So, a tropical colony will shrink by -110 settlers with zero maintenance due to the additional -10 settlers provincial modifier. Colonial maintenance also does not affect growth from colonist agents.

Colonists cannot be sent while a country is bankrupt.

### Missionary maintenance

Main article: Missionary maintenance

At the 1444 start, each active missionary costs 5ducats per year at full funding. This base value changes over the years. Reducing missionary maintenance reduces missionary strength.

### Root out corruption

Main article: Corruption

A country can lower corruption by spending up to 0.05ducats per effective development per month under the Root Out Corruption slider, for a maximum of -1% every year. Effective development is affected by autonomy. The total cost of rooting out corruption is calculated using the formula:

cost of rooting out corruption = corruption cost multiplier × effective development

where effective development is determined by the formula:

effective development = total national development − Σ(total province development × local autonomy)
• Corruption cost multiplier is the amount spent per effective development. This is the amount that is controlled by the slider. It can be changed from 0ducats per month to 0.05ducats per month.
• Local autonomy is used in decimal form in the above calculations.

#### Example

Total province development and local autonomy for each of the three provinces for Andhra

For the three-province country Andhra (see right), the maximum cost to root out corruption can be calculated as follows:

• Total national development: Kosta + Velanadu + Konaseema = 11 + 15 + 11 = 37
• Sum of effective development changes by each province:
Σ(province development × local autonomy)
• Kosta: 11 × 0.25 = 2.75
• Velanadu: 15 × 0.25 = 3.75
• Konaseema: 11 × 0 = 0
• effective development change = 2.75 + 3.75 + 0 = 6.5
• effective development = total national development − effective development change
= 37 − 6.5
= 30.5

So, the final cost will be:

total cost of rooting out corruption
= 0.05 × 30.5
= 1.52 ducats/month

The calculations above mean that higher local autonomy will decrease the cost of lowering corruption.

### Army maintenance

Main article: Army maintenance

At full army maintenance, each fielded regiment has a monthly maintenance cost equal to 2% of its recruitment price. All modifiers to maintenance are added together and applied to this. Reducing army maintenance using the slider affects reinforcement rates and morale, to 0% reinforcement rate and a -100% modifier to morale at minimal funding. Condottieri reinforcements and maintenance costs are applied even when maintenance slider is at zero.

Maintenance costs increase over time as a country advances in technology.

Maintenance costs will reduce when a regiment suffers casualties, but will increase due to an added cost for reinforcement. Maintenance costs will also increase when a country exceeds its force limit.

### Fleet maintenance

Main article: Navy maintenance

Fleet maintenance works the same as army maintenance but with certain exceptions:

• First, naval maintenance increases at discrete steps rather than continuously. It is increased by 10% at Diplomatic technology levels 3, 5, 9, 15, 19, 22, 25, 27, 29, and 31 (to a total of +100%).
• Third, vessels do not cost increased maintenance to repair, but also do not cost reduced maintenance if damaged.

Further differences, including those on how modifiers are applied, are listed on the Navy page.

If the Art of War DLC is enabled, mothballing allows naval units to be left unusable in a country's docks for lower maintenance, while giving ships 5% hull damage per year of being mothballed.

## Loans

### Bank loans

Taking a loan grants an amount of money equal to result of the following formula:

loan size = 0.5 × total development × (1 + trade efficiency from diplomatic technology)

Acquiring the National Bank idea in the Economic idea group can trigger an event in which loans can be changed to grant money equal to 6 or 24 months' income.

A loan may be taken at any time, although each loan taken increases inflation by 0.1.[1] A loan may be paid back in full, plus the total remaining interest owed, at any time during the loan period. If a loan expires and the borrower cannot (or chooses not to) pay the principal, the loan will be extended for an additional 5 years at the current interest rate, and inflation will increase by an additional 0.1.

#### Interest

Loans have a default interest rate of 4% per year,[1] paid monthly. The interest rate is influenced by the following factors. Note that these add to or subtract from the base 4%, so for example "−1% interest per annum" with no other modifiers results in an interest rate of 3%. The minimum interest rate that has to be paid is 1%.[1]

Conditions
−2%.00 as optional difficulty bonus (for the player (easy, very easy) or the AI (hard, very hard))
−1%.00 as lucky nation (AI only)
−0.25% with Ganga as personal deity (for Hindu nations)
−0.25% during parliament issue “Contribute to Government Debt Payment”
−0.25% with Papal action: Forgive Usury
−0.02% for every percentage point of revanchism
+1%.00 per point of negative stability
+5%.00 if bankrupt

Ideas and policies

Traditions Ideas Bonuses Policies
−1.0
• Gujarati Princedom idea 3: Safe Harbor for Jain Bankers
−0.5
• Administrative idea 4: Bookkeeping
• Economic idea 4: Debt and Loans
• Austrian idea 3: Fugger Banking
• Great Shun idea 3: Hidden Treasury
• Gutnish idea 7: Found Visby Bank
• Hamburger idea 6: Berenberg Bank
• Hanseatic idea 7: The Hansa Bank
• Tuscan idea 3: Tuscan Banking
−0.25
• Innovative-Trade: The Banking System

Various events and decisions.

### Loans from countries

Countries that have a strategic interest in another country's wars may grant loans to that country. With Rights of Man active, rulers with the Indulgent trait will accept loans from Human Players if needed.

#### Interest

The interest rate of loans from countries is set by the country granting the loan.

#### CB for cancelling loan

If the borrower refuse to pay the principal when a loan expires, the lender gets a 12-month CB "Cancelled Loan" against the borrower.

## Debase currency

Debasing currency gives the player a loan's amount of money at the cost of 2 corruption. It cannot be done if corruption has already reached 90. This is useful if the player wants to repay it over time at their pace (not receiving even more inflation for re-newing loans); however, it is a lot more costly than a regular loan, costing around 60% of its value to be repaid using only "Root Out Corruption", plus the negative modifiers for having corruption, but the value to root it out can be reduced significantly if the player is ahead of time on diplomatic and/or administrative technology, and if its ruler has the Incorruptible trait, giving a "negative" interest if the player is willing to wait for it to decay naturally, with the only penalty the positive corruption effects.

## Bankruptcy

If the combined monthly interest of loans exceeds a country's monthly income, the country will be forced to declare bankruptcy. It is also possible for any country with at least one loan to manually declare bankruptcy.

Bankruptcy clears all loans and removes 25% of the country's current inflation (unless already bankrupt), but gives a number of negative effects for 5 years:[2]

 +5% Interest per annum −50% Morale of armies −50% Morale of navies −25% Reinforce speed +0.25 Secretariat faction influence +0.25 The Guilds influence −100% Manpower recovery speed −100% Sailor recovery speed +50% Advisor cost −1 Monthly fervor −200 Global settler increase +0.05 Monthly autonomy change −50% Institution spread −0.5 Militarization of state −2 Yearly absolutism +50% Technology cost +50% Idea cost −0.1 Mandate growth modifier

Entering bankruptcy has the following immediate effects:

• Lose 100 prestige
• Lose 3 stability
• Lower legitimacy to 0
• Lose 25 republican tradition (other government types' scores are not affected)
• Lose all money in the treasury
• Reduce all monarch power to −100
• Disband all mercenaries
• Fire all advisors
• Cancel all buildings and units under construction
• Cancel all coring or culture conversion currently in progress
• Gain 10% devastation in all provinces
• Remove the 'Recent Uprising' modifier from all provinces
• Destroy all buildings built or upgraded in the last 5 years
• Remove all trade company investments

### Bankruptcy strategy

Deliberately going bankrupt, though dangerous, can be a powerful tool for restoring the economy if managed carefully. Try to have truces lasting at least 5 years with as many dangerous neighbors as possible, so they can't attack during bankruptcy. Before declaring bankruptcy, spend all monarch points on developing provinces or boosting stability (to at least +1 - less will be wasted), as they will all be lost otherwise. Ensure that no provinces are in the process of being cored. Colonies should be abandoned unless very close to completion.

Rebels are more difficult to fight while bankrupt due to the penalties to army morale, but can be beaten with enough numbers. Since manpower gain is almost zero during bankruptcy, it may be necessary to re-hire mercenaries to fight them. Get stability back up as soon as possible and also consider spending military points to raise legitimacy (requires Rights of Man DLC).

## Inflation

In economics, inflation is an increase in the price of goods over time. In gameplay terms, inflation makes all expenses cost more. Low levels of inflation (around 10%), though not ideal, are reasonable. Around 20% or higher, this could signify an economic catastrophe, and measures must be taken to avoid total collapse. However, as soon as inflation is 5+%, it's possible to get bad events because of the high inflation incurring stability drops or increased local autonomy.

Contrary to real life, inflation in game does not mean constantly increasing prices, but rather a flat increase of the country's expenses. In real life, certain incomes would increase with inflation as well. This reflects that the in game "ducats" have a constant value over the course of centuries and serve as an absolute indicator of value. The in-game inflation simply represents the inflation over the time between collecting income and spending it, therefore representing that the income has lost value while it was sitting in the country's treasury.

### Gaining inflation

Inflation is increased by the following:

• Each loan taken or extended increases inflation by +0.10.
• Income from gold increases inflation by 0.50 per year times the proportion of income from gold.
• Lump sums of monetary compensation claimed in a peace treaty (but not reparations) cause a one-time increase of inflation.
• Selling provinces or ships to other nations
• Receiving gifts from other nations
• (Requires El Dorado DLC) Receiving or plundering treasure fleets
• Various events can increase inflation.

These are all situations where the country's money supply is expanded. In economics, an expansion in the supply of money without corresponding economic growth causes a decrease in its value, i.e. inflation. Before the middle of the 20th century, and certainly during the period of EU4, currency was only considered money to the extent that it was either made of or backed by gold (and silver, which is represented by gold in the game), which is why gold income (a direct injection of pure money) causes inflation.

### Reducing inflation

#### Passive

Several effects reduce inflation over time.

Conditions
+0.10 yearly
• employing a Master of Mint advisor
• for 20 years after the “Forgive Usury” Papal interaction
+0.05 yearly
• during parliament issue “Contribute to Government Debt Payment”
• for trading in gems
• with difficulty set to very easy for players (or very hard for the AI)
Traditions Ideas Bonuses Policies
+0.10 yearly
• Economic idea 3: National Bank
• Andean idea 3: Tears of the Sun
• Brazilian idea 3: Mines of Minas Gerais
• Butua idea 2: Strict Gold Trade Regulations
• Dutch idea 1: Found the Amsterdam Wisselbank
• Malvi idea 6: Jain Bankers
• Slovak idea 3: Golden Kremnica
+0.05 yearly
• Austrian idea 3: Fugger Banking

Furthermore various events, decisions, triggered modifiers and mission rewards can affect inflation.

#### Active

If passive means are unavailable or insufficient, the  Reduce Inflation button in the budget panel reduces inflation by −2.0 in exchange for 75 administrative power.

## War taxes

Counter-intuitively, war taxes do not increase tax income. They instead decrease maintenance and increase available mercenaries for 2 years[1] and cost 50 military power[1] unless the Improved Wartaxes splendor ability is active. This bonus will end as soon as the nation is at peace. The bonus given are:

 −15% Land maintenance modifier −15% Naval maintenance modifier +5% Available mercenaries

## Footnotes

1. See in /Europa Universalis IV/common/defines.lua.
2. See in /Europa Universalis IV/common/static_modifiers/00_static_modifiers.txt (Static modifiers#Bankruptcy).

 Concepts Buildings • Colonization • Trade • Trade goods • Trade nodes • Trade company • Tariffs • Development • Tax • Production • Overextension • War exhaustion