Fiscal stabilization policy proven effective in boosting economy during downturns.
The article discusses the importance of having a fiscal stabilization policy to help stabilize the economy during short-term fluctuations. It argues that temporary changes in taxes or public spending can help boost economic activity when needed. The effectiveness of such policies is supported by real-world evidence, but the specific approach should depend on the type of economic shock and the structure of the economy. While discretionary fiscal policies may face challenges, automatic stabilizers can help to some extent without needing constant adjustments. Overall, the size and design of automatic stabilizers should be carefully considered to ensure they effectively support the economy.