Automatic fiscal stabilizers give fiscal policy an advantage over monetary policy in stabilizing output because they act faster.

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• During post-2008 fiscal consolidation, the costs of high public debt were overestimated and fiscal multipliers were underestimated, understating the output costs of austerity. OBOlivier Blanchard1 Jun 2022fiscal policy
• Fiscal multipliers vary across time and place but are generally nonzero, positive for spending, negative for taxes, and larger when monetary policy cannot offset them. OBOlivier Blanchard1 Jun 2022fiscal policy
• The main obstacle to sound fiscal policy debate is a widespread, quasi-religious belief that public debt is inherently bad. OBOlivier Blanchard1 Jun 2022fiscal policy
• A fiscal expansion when the economy is already at potential output prompts monetary tightening that dampens or eliminates its effect on output. OBOlivier Blanchard1 Jun 2022
• Under a 2% inflation-targeting regime, monetary policy carries no meaningful fiscal implications. SSScott Sumner14 Sept 2026

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