The Fiscal Placebo
Discretionary fiscal policy is associated with long time lags that, according to many authors, prevent its efficient implementation during economic crises. Implementation lags, i.e. the lag between the day on which economic policymakers decide on a specific form of response to the actual economic...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
University of Finance and Administration
2015-12-01
|
| Series: | ACTA VŠFS |
| Subjects: | |
| Online Access: | https://is.vsfs.cz/auth/repo/5134/LIPOVSKA.pdf |
| Summary: | Discretionary fiscal policy is associated with long time lags that, according to many authors,
prevent its efficient implementation during economic crises. Implementation lags,
i.e. the lag between the day on which economic policymakers decide on a specific form
of response to the actual economic situation and the day on which a relevant law takes
effect, have the signalling function. In this article we analyse the implementation lag in the
discretionary fiscal policy in the Czech Republic during economic crises. First, we present
arguments according to which time lags are pro-cyclic and thus they prevent implementation
of the discretionary fiscal policy. We will verify the grounds behind the arguments
concerning the Czech economy. Furthermore, we focus on the reasons due to which the
implementation lag may be neutral as concerns the economic cycle. In the third part, we
present our own concept of fiscal placebo pursuant to which the implementation lag
may have negative, neutral, or even positive impacts on the actual economy. We have
demonstrated, that anti-crisis laws have taken effect, with a single exception, always only
after the end of the recession to which they were supposed to react and the volume of the
funds used by the government to achieve stabilization is relatively low. |
|---|---|
| ISSN: | 1802-792X 1802-7946 |