Fiscal macroeconomic stabilization: a new era?
AbstractThis article aims to argue with the wide-spread perception of discretionary fiscal policy as a poor macroeconomic stabilization tool, especially in comparison with the contemporary performance of monetary policy. European Monetary Union Member States are hit by the asymmetric shocks or respond dissimilarly to a common shock. This is the strongest reasoning for the rehabilitation of active fiscal macroeconomic stabilization. Prudent fiscal and debt management policies are powerful to mitigate the economic impacts of various shocks at a national level and thus to replace the loss of autonomous monetary and exchange rate policy. The resurrection of fiscal policy is contingent on the efective institutional framework for its implementation. The principle of proposed reforms in fiscal policy stems from political economics background and corresponds to recent reforms in monetary and public debt management institutions. The only way how to address the traditional incentive constraints of policy discretion is to set up an independent fiscal agency outside of Ministry of Finance.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2003 (2003)
Issue (Month): 3 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
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