The authors argue that the trigger should be changes in unemployment rather than changes in output, and the design of semiautomatic stabilizers, whether they focus on mechanisms that rely primarily on income or on intertemporal substitution effects (changing the timing of consumption), depends crucially on the design of discretionary policy. Another salient feature of a well-designed automatic stabilizer is its ability to maintain economic stability while keeping public debt under control. The major advantage of automatic stabilizers is that it require no legislative action by Parliament to be made effective. Unlike purely automatic stabilizers (mechanisms built into government budgets that automatically-without discretionary government action or explicit triggers-increase spending or decrease taxes when the economy slows or enters a recession), semiautomatic stabilizers are targeted tax or spending measures that are triggered if, say, the output growth rate declines or the unemployment rate increases beyond a specified threshold. Answer: Automatic stabilizers are a type of fiscal policy developed to counterbalance fluctuations in a nations economic pursuit via normal operation without extra, timely permission by the government or policymakers. Blanchard and Summers argue for the introduction of what they call “semiautomatic” stabilizers. Fiscal policy will have to play a major and likely dominant role in stimulating the economy, requiring policymakers to fundamentally reconsider fiscal policy. Automatic fiscal stabilizers are taxes and government programs that respond automatically to changing economic conditions, and do not require additional. With interest rates persistently low or even negative in advanced countries, policymakers have barely any room to ease monetary policy when the next recession hits.
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