Fiscal Policy

  1. Challenges and Limitations of Fiscal Policy
    1. Time Lags
      1. Recognition Lag
        1. Data Collection Delays
          1. Economic Forecasting Challenges
          2. Legislative Lag
            1. Political Process
              1. Congressional Approval
              2. Implementation Lag
                1. Administrative Processes
                  1. Program Setup
                  2. Effect Lag
                    1. Economic Response Time
                      1. Behavioral Adjustments
                    2. The Crowding-Out Effect
                      1. Mechanism
                        1. Increased Interest Rates
                          1. Government Borrowing Effects
                          2. Impact on Private Investment
                            1. Reduced Business Investment
                              1. Housing Market Effects
                              2. Conditions Affecting Crowding-Out
                                1. Interest Rate Sensitivity
                                  1. Economic Slack
                                    1. Monetary Policy Accommodation
                                  2. Political Constraints
                                    1. The Political Business Cycle
                                      1. Electoral Timing
                                        1. Policy Manipulation
                                        2. Ideological Differences
                                          1. Conservative vs. Liberal Views
                                            1. Role of Government Debate
                                            2. Public Choice Theory
                                              1. Politician Incentives
                                                1. Bureaucratic Behavior
                                                2. Influence of Special Interest Groups
                                                  1. Lobbying Effects
                                                    1. Rent-Seeking Behavior
                                                  2. Ricardian Equivalence
                                                    1. The Theory of Taxpayer Foresight
                                                      1. Theoretical Foundation
                                                        1. Arguments Supporting Ricardian Equivalence
                                                          1. Criticisms and Limitations
                                                            1. Liquidity Constraints
                                                              1. Finite Horizons
                                                                1. Uncertainty
                                                                2. Empirical Evidence
                                                                3. Supply-Side Effects
                                                                  1. Impact on Labor Supply
                                                                    1. Work Incentives
                                                                      1. Labor Force Participation
                                                                      2. Impact on Capital Formation
                                                                        1. Investment Incentives
                                                                          1. Savings Effects
                                                                          2. Laffer Curve
                                                                            1. Concept and Implications
                                                                              1. Tax Revenue Maximization
                                                                                1. Empirical Evidence
                                                                                  1. Policy Applications
                                                                                  2. Tax Policy and Economic Incentives
                                                                                    1. Marginal Tax Rates
                                                                                      1. Tax Base Effects

                                                                                  Previous

                                                                                  6. Automatic Stabilizers vs. Discretionary Fiscal Policy

                                                                                  Go to top

                                                                                  Next

                                                                                  8. Government Budgets, Deficits, and Debt