Automatic stabilizers key in stabilizing economies, discretionary policy on the rise
The article examines how countries use fiscal policy to stabilize their economies during economic ups and downs. It shows that most countries rely more on automatic changes in taxes and spending to stabilize their economies than on deliberate government actions. Countries with bigger governments tend to have more stable economies. The United States uses more deliberate government actions to stabilize its economy because its automatic stabilizers are less effective. Overall, countries have been using more deliberate government actions to stabilize their economies in recent years.