Question

It is easier and faster to change discretionary fiscal policy in countries where governments do not have to put forward and win their case in parliament (i.e. autocracies and dictatorships) as opposed to democracies, where they do have to win a vote on the floor of parliament to enact their proposed changes to discretionary fiscal policy. State whether you agree or disagree with this statement, and justify your answer. Your justification can come from information provided in the course, or from external sources (cite your source).

Answer 1

Discretionary fiscal policy is pursued according to exigencies in the economy. The government has to make a change in expenditure and taxes deliberately. Under the democratic system, the Government can not take action deliberately. it has to go through a certain process or such as passing the order through congress. Thus it takes the time to execute the changes in the policy. thus lag effects are usually significantly high in the case of democratic government.

On the other hands, under the dictatorship, there is no such lag effects, the highest authority takes the action immediately. such actions are relatively more effective.

Hence, this is right statement.