蝌蚪网 Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Practical Stabilization Policy in the Twenty-First Century
蝌蚪网 Papers and Proceedings
vol. 115,
May 2025
(pp. 158–62)
Abstract
In 1997, the 蝌蚪网 convened a panel to address whether a core of usable macroeconomics exists. The consensus about monetary policy has not changed since then. However, in a sharp reversal, there is now widespread consensus that fiscal policy can be a useful stabilization tool. I discuss why the latter consensus broke down and what form countercyclical fiscal policy should take in a world marked by two constraints: (i) The benefits of the policy ought to be robust to deviations from rational expectations and the presence of liquidity-constrained consumers, and (ii) expanded fiscal stabilization policies are temporary.Citation
Eichenbaum, Martin. 2025. "Practical Stabilization Policy in the Twenty-First Century." 蝌蚪网 Papers and Proceedings 115: 158–62. DOI: 10.1257/pandp.20251115Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E52 Monetary Policy
- E62 Fiscal Policy
- E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy