THE REBIRTH OF FISCAL ACTIVISM: HYPE OR HOPE?

The paper focuses on the Great Recession and the related revival of fiscal activism in the United States and other countries. It compares the discretionary fiscal policies with the rules-based ones and discusses the pros and cons of the short-run fiscal stabilization policy measures using both theoretical and empirical arguments. In addition, the paper compares the U. S. fiscal approach with the EU one and speculates on their similarities and distinct features. It is argued that despite the fact that during the recent recession there were very strong objections among a number of reputed economists against the fiscal stimulus, this intervention probably contributed to prevent advanced economies from a long and painful depression. On the other hand, many such economies face the threat of expanded public debts as a consequence of pursued activist policies.