However, this type of nondiscretionary, stabilization policy, does automatically expand deficits as well as the national debt but the trade-off is perhaps a more balanced approach towards our nation and communities than with a free-market, laissez-faire, "survival of the fittest" philosophy.
Sunday, August 11, 2013
Stabilization Policy
The "stabilization programs" mentioned in the 8/4/13 post (i.e., taxes and transfer payments, especially on programs such as unemployment compensation) are meant to prevent consumption from falling dramatically during recessions as a result of increased unemployment. The rationale is basically this: If aggregate demand can be stabilized (via consumption) then households won't experience as much uncertainty and stress, as they would in the absence of stabilization policy, the recession won't be as severe, etc., etc., etc..
However, this type of nondiscretionary, stabilization policy, does automatically expand deficits as well as the national debt but the trade-off is perhaps a more balanced approach towards our nation and communities than with a free-market, laissez-faire, "survival of the fittest" philosophy.
However, this type of nondiscretionary, stabilization policy, does automatically expand deficits as well as the national debt but the trade-off is perhaps a more balanced approach towards our nation and communities than with a free-market, laissez-faire, "survival of the fittest" philosophy.
