Fiscal Policy

Fiscal Policy
The hand of government policy affecting the economy through the budget with changes in tax and welfare and government spending. Monetarists argue that fiscal "fine tuning" the economy is ultimately destabilizing, they say that fiscal policy is less effective than monetary policy or not effective at all. Supporters of the fine-tuning disagree, of course, saying that the relative stability of the end of 1950 and 1960 can be attributed to fine-tuning. Due to political constraints and budget cycles, fiscal policy is generally less flexible than monetary policy.