Automatic Stabilizers
Introduced| English |
|---|
| legislative lag/ˈledʒɪslətɪv læɡ/ |
| automatic stabilizers/ˌɔːtəˈmætɪk ˈsteɪbəlaɪzəz/ |
| progressive/prəˈɡresɪv/ |
| recession/rɪˈseʃn/ |
| transfer payments/ˈtrænsfɜː ˈpeɪmənts/ |
| unemployment benefits/ʌnemˈplɔɪmənt ˈbenɪfɪts/ |
| discretionary/dɪˈskreʃənəri/ |
Policy that acts by itself
- Deliberate fiscal policy has a weakness: new laws take time to pass.
- Debate and votes create a legislative lag 立法时滞.
- But some parts of the budget push back against the cycle on their own.
- These are automatic stabilizers 自动稳定器 — no new law needed.
An automatic stabilizer dampens the business cycle:
It is built into existing law, so it acts instantly with no legislative lag.
Progressive taxes
- Under a progressive 累进 tax, higher incomes are taxed at higher rates.
- In a boom, incomes rise, so tax collections rise more than proportionally — automatically draining spending power and cooling AD.
- In a recession 经济衰退, incomes fall, collections fall even faster, so households keep more of each dollar, propping up AD.
- The tax system leans against the cycle by itself.
In a boom, a progressive tax system automatically:
Rising incomes are taxed more than proportionally, draining spending power in a boom.
Transfer payments
- Transfer payments 转移支付 give income without asking for output in return — like unemployment benefits 失业救济金.
- In a recession, more people lose jobs and claim benefits, so this spending rises automatically, supporting AD just when it is weakest.
- In a boom, fewer people claim, so it falls, cooling AD.
- Again, no vote is needed.
Automatic or discretionary?
Automatic stabilizers (progressive taxes, transfer payments) act by themselves with no new law; discretionary policy is a deliberate new spending or tax choice.
In a recession, unemployment benefits rise automatically, supporting aggregate demand.
More people claim benefits when jobs are lost, so transfer spending rises on its own.
Select all that are automatic stabilizers.
Progressive taxes and transfers act automatically; a new bill is discretionary.
Automatic vs discretionary
- Automatic stabilizers act instantly and by themselves, built into existing law — no legislative lag.
- Discretionary 相机抉择 fiscal policy is a deliberate new choice (a fresh spending bill or tax change) — precise, but slow to enact.
- Automatic stabilizers do not usually close a whole gap, but they blunt the shock and buy time.
- Worked idea. A recession hits: benefits rise and income taxes fall automatically, so AD does not drop as far.
The time it takes to debate and pass a new spending or tax law is called the ______ lag.
Discretionary policy suffers a legislative lag; automatic stabilizers do not.
Compared with discretionary policy, automatic stabilizers are:
They act by themselves at once; discretionary policy can be aimed precisely but is slow.
Automatic stabilizers dampen the business cycle without new legislation: progressive taxes drain spending in booms and less in slumps, and transfer payments (like unemployment benefits) rise automatically in a recession. Unlike discretionary policy, they act instantly with no legislative lag.