how should we as a country deal with this issue from a fiscal point of view? course hero

How does fiscal policy contribute to output stability?

Policymakers can also raise demand directly by deliberately spending more. Either way, higher deficit (or a lower surplus) effectively cushions the blow on output. The response of the government budget balance to economic activity is clearly the key to understanding the contribution of fiscal policy to output stability.

What are the benefits of good fiscal policy design?

Stability, growth and debt sustainability could all greatly benefit if measures that destabilizes output, such as spending increases in good times, were avoided. That’s the kind of policies a well-designed fiscal framework can encourage (see the recent blog by Vitor Gaspar, Richard Hughes and Laura Jaramillo on Dams and Dikes for Public Finances ).

What can governments do to protect the economy from financial crisis?

Image: Centre for Economic Policy Research (CEPR) To avoid deep, long-lasting damage to economies, governments will need to reduce the number of personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working, and increase public investment and healthcare spending, the authors write.

What will it take to solve the economic crisis?

Governments will need to reduce personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working, and increase public investment and healthcare spending, the economists say.

What should be the solution to the fiscal cliff?

A solution to the fiscal cliff should include changes to Social Security. Demands that Social Security should be taken off the table, such as those made by Senator Dick Durbin (D-IL) [1] and several others, are both misguided and wrong.

What is the Heritage Foundation's plan?

[6] . The Heritage plan makes Social Security an insurance program that would protect every American against retirement poverty.

How can governments avoid deep, long-lasting damage to economies?

To avoid deep, long-lasting damage to economies, governments will need to reduce the number of personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working, and increase public investment and healthcare spending, the authors write.

Who is the chief economist of the IMF?

More than 40 high-profile economists, including IMF Chief Economist Gita Gopinath and former President Barack Obama’s top economic adviser, Jason Furman, have contributed to an eBook from the Centre for Economic Policy Research (CEPR) in which they urge governments to act quickly and do whatever it takes to keep the lights on.

What measures flatten the infection curve, but steepen the recession curve?

Flattening two curves. Containment measures flatten the infection curve, but steepen the recession curve. Image: Centre for Economic Policy Research (CEPR) Though the economists say it’s still too early to tell how bad the economic damage will be, they’re certain it will be large – the pandemic is destroying lives and livelihoods around the world.

Why are conservatives opposed to raising taxes?

Conservatives opposed to raising taxes hold the same argument for Social Security taxes, namely that eliminating the cap would hurt GDP and economic growth generally and that wealthy Americans are already paying more income taxes.

Why should payroll taxes be raised?

Payroll taxes can be raised in order to cover Social Security costs. Currently, the tax rate is 6.2 percent for both employee and employer, totaling 12.4 percent. A Gallup poll found that half of Americans would be in favor of raising taxes in order to fund Social Security, if the alternative was reducing benefits.

Why would poverty increase with lowering COLA?

And it’s expected that poverty rates would increase from reducing COLA, because a decrease in benefits, on the margin, is more likely to affect poorer Americans than wealthier ones .