Reassessing Discretionary Fiscal Policy
观点 · 2004-04-30
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Abstract: Recent changes in policy research and in policy-making call for a reassessment of countercyclical fiscal policy. Such a reassesment indicates that countercyclical fiscal
policy should focus on the automatic stabilizers rather than discretionary actions. Monetary policy has been reacting more systematically to output and inflation; long
expansions in the 1980s and 1990s demonstrate the effectiveness of such a policy. It is unlikely that discretionary countercyclical fiscal policy could improve things, even if
there were less uncertainty about fiscal impacts. A discretionary countercyclcal fiscal policy could make monetary policy-making more difficult. Rather discretionary fiscal
policy should focus on long run issues, such as tax reform and social security reform.
policy should focus on the automatic stabilizers rather than discretionary actions. Monetary policy has been reacting more systematically to output and inflation; long
expansions in the 1980s and 1990s demonstrate the effectiveness of such a policy. It is unlikely that discretionary countercyclical fiscal policy could improve things, even if
there were less uncertainty about fiscal impacts. A discretionary countercyclcal fiscal policy could make monetary policy-making more difficult. Rather discretionary fiscal
policy should focus on long run issues, such as tax reform and social security reform.
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