Question
In macroeconomic management, there is a big debate about whether the annual budgetformulation should fall a set of fiscal rules ( ie. parameters set by
In macroeconomic management, there is a big debate about whether the annual budgetformulation should fall a set of "fiscal rules" ( ie. parameters set by technocrats to limit government tax and spend excesses, designed to avoid the temptation to borrow more, leaving future generations to deal with higher debt loads) or whether taxes and spending should be at the discretion of the chief executive and the legislature.
Which of the following circumstances would make you want to adhere to "fiscal rules" and not "discretionary rules"decided politicians
A. | The continuance of Divided Government,where normally one of the two major political parties controls either the Congress or the Presidency but not both. In Divided Government, the two branches of government are too often at loggerheads, differing sharply about what should be done about the national economy. As a result, there are long policy lags. | |
B. | Economic forecasting is very accurate and tax and spending bills prepared by the government tend to be accurate. Politicians are "hitting" their numbers in real life. | |
C. | Structural reforms made the self-correcting mechanisms in the economy quicker and faster stronger. | |
D. | Divided Government + quicker self-correcting mechanisms |
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