Discretionary Policy versus Non-Discretionary Policy in the Economic Adjustment Process

by Dinga, Emil & Ionescu, Cornel & Padurean, Elena
Published in Romanian Journal of Economic Forecasting
, 2010, volume 13 issue 4, 184-207

 Requires a PDF viewer such as Xpdf or Adobe Acrobat Reader
 188Kb

Abstract

The study aims to examine the concept of automatic fiscal stabilization in the context of macroeconomic adjustment policies. To this end, first a conceptual distinction between discretionary public adjustment policies and non-discretionary ones is achieved. Second, sufficient and necessary attributes for an automatic fiscal stabilizer are identified and examined, in order to obtain a definition of this instrument. The whole research approach is characterized by a logical and abstract way of thinking, to provide a general and non-contextual result. Finally, a general mechanism of action of automatic fiscal stabilizers is proposed, by introducing the basic concepts of action base and of action rate of such an instrument.

Keywords: sustainability, fiscal policy, automatic fiscal stabilizers, discretionary versus nondiscretionary, principle of the minimal action
JEL Classification:
E62, E63, H3