Work, Well-Being, and a New Calling for Countercyclical Policy

Published in: International Journal of Epidemiology, v. 34, no. 6, Dec. 2005, p. 1222-1225

Posted on on December 31, 2004

by Ryan Edwards

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Economists in the tradition of John Maynard Keynes advocated activist countercyclical economic policies: increases in spending or decreases in taxes that are implemented during economic downturns in order to dampen business cycles. New policies took neoclassical emphases on fostering price stability, improving incentives to work and save, and increasing the potential for long-run growth. There is much to be said about the beneficial impacts of such policies in the long run, but incentivizing work necessarily tilts the fiscal policy in the procyclical direction, i.e. increasing spending during times that are already good, although that was probably never the original intent.

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