Automatic Fiscal Policies to Combat Recessions

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M.E. Sharpe, Jan 1, 2003 - Business & Economics - 239 pages
What happens if monetary policy runs out of ammunition fighting a recession? It happened in Japan in the 1990s, and it nearly happened in the U.S. in 2001. Once the interest rate has been cut to zero, then what?

In this timely and important discussion of fiscal policy options to combat recessions, Lawrence Seidman offers new automatic fiscal policies that can complement current automatic stabilizers and counter-cyclical monetary policy. Dr. Seidman proposes that Congress select and pre-enact a fiscal stimulus package that would be automatically triggered whenever the economy enters a recession, and automatically de-triggered whenever the economy recovers. He considers two kinds of policies: temporary income transfers (like the 2001 $600 rebate) and temporary consumption tax cuts. Dr. Seidman brings a fresh review of fiscal policy tools and a long-needed look at the most prominent research in the field.

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Fiscal Policy to Combat a Severe Recession
An Automatic Transfer Tax Rebate
An Automatic Temporary Consumption Tax Cut

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