How Not to Stimulate the Economy
The Public Interest, p. 99, Summer 1993
11 Pages Posted: 20 Sep 2010
Date Written: 1993
Argues that government efforts to prevent recessions through countercyclical fiscal policies never work because recessions are never perceived soon enough for action. And even if they were, it would take too long for Congress to act or for spending to flow into the economy to be effective. A review of all postwar recessions through 1990/91 shows that all countercyclical programs came too late to prevent or even moderate them. Indeed, they ended up being procyclical rather than countercyclical.
Keywords: fiscal policy, countercyclical policy, public works
JEL Classification: E37, E61, E62, E63, E65
Suggested Citation: Suggested Citation