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Reassessing Discretionary Fiscal Policy (2000)
| Venue: | JOURNAL OF ECONOMIC PERSPECTIVES, 14(3): 21–36 |
| Citations: | 130 - 4 self |
BibTeX
@MISC{Taylor00reassessingdiscretionary,
author = {John B. Taylor},
title = {Reassessing Discretionary Fiscal Policy},
year = {2000}
}
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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.
Keyphrases
discretionary fiscal policy countercyclical fiscal policy automatic stabilizer tax reform social security reform discretionary countercyclcal fiscal policy policy research discretionary countercyclical fiscal policy policy-making call monetary policy-making monetary policy long run issue recent change fiscal impact discretionary action long expansion
