automatic fiscal stabilisers

What is automatic fiscal stabilisers?

automatic fiscal stabilisers definition and meaning on Finance terms:
The cyclical component of the budget balance. In contrast to discretionary fiscal policy, these are the changes in the budget balance caused by the automatic reaction of government revenue (particularly income taxes) and government expenditure (particularly welfare spending) to economic fluctuations. As such, they stabilise aggregate demand and thus reduce volatility in economic activity. See also
budget balance
discretionary fiscal policy<

 

reference: https://www.ecb.europa.eu/home/glossary/html/index.en.html

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