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

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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