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UK Fiscal Policy
In the 1950, 60s and 70s the govt was keen to use fiscal policy to fine tune the economy, it was felt that the govt could ensure full employment by increasing AD when necessary. During this period it appeared that there was a trade off between unemployment and inflation as suggested by the Phillips curve.
However in the 1970s the economy experienced stagflation, this involves an increase in inflation and unemployment at the same time. This was seen to be evidence that fiscal policy was not effective in maintaining full employment.
Current UK demand policy tends to concentrate on the use of Monetary policy. Monetary policy has a few advantages over fiscal policy
- It is easier to change the interest rate than levels of tax and spending.
Essays and Revision Notes on Fiscal Policy
Problems of Government Borrowing in the UK
How Government finances national debt
WHat does Government Spend its Money On