Discretionary Fiscal Policy - Explained
What is Discretionary Fiscal Policy?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What is Discretionary Fiscal Policy?
Discretionary fiscal policy concerns government taxation and spending that is not tied to mandatory payments or entitlements and is done to affect aggregate demand in the economy.
Keynesian economists believe that government intervention into markets in the form of discretionary spending and taxation is necessary to regulate market swings and preserve aggregate demand in the economy.
Related Topics
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- Autonomous Spending
- Autonomous Consumption
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- Expansionary Fiscal Policy
- Contractionary Fiscal Policy
- Progressive vs Regressive Tax
- Marginal Tax Rates
- Proportional Tax
- Trickle Down Theory
- Discretionary Fiscal Policy
- Automatic Stabilizers
- Effects of Discretionary Policy (Interest Rates & Lags)
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- National Debt
- Government Borrowing
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- Ricardian Equivalence
- Balanced Budget - Deficit and Surplus
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- Stabilization Policy
- Robin Hood Effect
- Ricardo Barro Effect
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- How Does Fiscal Policy Affect Interest Rates?
- Crowding Out
- Types of Lag in Fiscal Policy
- Temporary and Permanent Fiscal Policy
- Limitations of Fiscal Policy?
- How Politics Affects Discretionary Fiscal Policy
- Government Borrowing
- National Savings and Investment Identity
- Debtor Nation
- Fiscal Policy Affects Trade Balances
- Twin Deficits
- Exchange Rates Affect Budget and Trade Deficits
- What are the risks of chronic large deficits in the United States?
- How Fiscal Policy Can Affect Trade Imbalances
- Government Borrowing Affect Private Savings
- Ricardian Equivalence
- Fiscal Policy Affects Investment and Economic Growth
- Crowding Out of Physical Capital Investment?
- How Does Government Borrowing Affect Interest Rates in Financial Markets?
- Government Investment in Physical Capital
- Public Investment in Human Capital
- Fiscal Policy Can Affect Technology Development
- Economic Cycle or Business Cycle
- Business Cycle Indicator
- Peak and Trough
- Recession and Depression
- Hard Landing vs Soft Landing
- Economic Bubble
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- Great Depression
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- Bureau of Economic Analysis
- Business Starts Index
- American Recover and Reinvestment Act
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