Present a thorough analysis of fiscal policy. Detail the effects of discretionary fiscal policies, the various policy levers, the impact of crowding out, time lags, and automatic stabilizer.
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Write My Essay For MeThorough analysis of fiscal policy
Fiscal policy is defined as the use of tax policies and government spending in order to influence economic growth, inflation, aggregate demand and employment (Alesina, Alberto and Silvia, 19-68). Expansionary fiscal policies are used during economic recession to boost economic growth while contractionary fiscal policies are used when there is economic boom. Discretionary fiscal policies are abruptly made by policymakers to rectify a macroeconomic disorder while commitment policies are based on predetermined rules.
Use of discretionary fiscal policy is challenging because of time lags between recognizing the need for fiscal policy change and implementation of such policies. This…
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