Automatic Stabilisers and Government Intervention

Automatic Stabilisers and Government Intervention

In the first video about fiscal policy, Tim gave us an overview of the broader macroeconomic model that provides the framework for determining how fiscal policy influences the trajectory of economic growth.  In this video, he explains us the theory behind macroeconomic policy but dig a bit deeper, looking specifically at how passive fiscal policy works, then more interestingly at the fiscal policy tools available to governments to influence their economies.
Overview

Fiscal policy can be discretionary, but an economy also has automatic stabilisers that influence business cycles even if a government is not proactively using fiscal policy tools. The major discretionary fiscal policy tools available to a government to correct an economy that is out of equilibrium are taxes and government expenditures.

Key learning objectives:

  • Explain automatic stabilisers and how they work over a business cycle

  • Examine the discretionary policy tools available to governments to influence business cycles, specifically taxes and government expenditures

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Summary
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Expert
Tim Hall

Tim Hall

Tim has nearly 30 years of experience in the international capital markets at major global institutions and has worked both on the buy-side and the sell-side. He has worked with numerous companies, banks and governments in developed and emerging markets on investment grade and high yield bond issues, from straight-forward to very complex acquisition/leveraged financings. Tim has also been on the board of a UK “challenger bank.” Tim has an MBA from the Wharton School, and is a CFA.

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