Fiscal stimulus refers to government actions designed to boost economic activity, often in response to a recession or slowdown. This involves increasing...
Fiscal stimulus involves government measures, like increased spending or tax cuts, designed to boost economic activity and demand, often during an economic downturn or recession.
The primary types include direct government spending (e.g., infrastructure projects, aid programs) and tax policy changes (e.g., tax cuts for individuals or businesses).
Governments use it to counteract economic contractions, stimulate job creation, encourage consumer spending and business investment, and ultimately foster overall economic growth.
Criticisms often include increased national debt, potential for inflation, 'crowding out' private investment, and the risk of inefficient or politically motivated spending.
Fiscal stimulus is government-led (spending, taxes), while monetary stimulus is central bank-led (e.g., interest rate adjustments, quantitative easing) to influence money supply and credit conditions.