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Economic Brief

April 2009, No. 09-04

What We Do and Don't Know about Discretionary Fiscal Policy

Renee Haltom

There is a lack of consensus about the effects fiscal policy measures may have during a recession. But we can draw some general conclusions from economic theory.

Additional Resources

Blinder, Alan S. "The Case Against the Case Against Discretionary Fiscal Policy." Working Paper No. 100, Princeton University Center for Economic Policy Studies, June 2004.

Feldstein, Martin. "Rethinking the Role of Fiscal Policy." Paper Presented at the Annual Meeting of the American Economic Association, January 2009.

Romer, Christina D. and David H. Romer. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks." Working Paper No. 13264, National Bureau of Economic Research, July 2007. (Final version of paper published in American Economic Review.)

Economist Debates: Keynesian Principles - A lively and thorough discussion of the Keynesian approach to fiscal policy.

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