Automatic fiscal stabilisers are automatic measures which dampen the impacts of changes in the business cycle, such as an economic downturn. For example, when the economy enters a recession, there is a decrease in tax revenue and welfare spending increases, softening the impact of the recession.
“One of the important roles of fiscal policy is to help to reduce fluctuations in demand. To support economic stability, the government absorbs some of the risks of income volatility faced by individual households and firms. Many fiscal policy instruments act to soften the blow of economic downturns and restrain the economy when it overheats. For example, when job and spending levels are high, tax payments – which are linked to current income – rise, and fewer households receive benefits such as unemployment insurance.”Economics Observatory, ‘What are the fiscal consequences of the UK response to coronavirus?’
vilisers needs looked at. These are automatic fiscal measures that dampen the effects of changes in the business cycle. They can be used alongside other fiscal policies (i.e. tax cuts, etc.) but they are by definition automatic, with no need for govt policy/intervention. @Untitled. Therefore, when the economy is in recession, tax revenue falls, welfare spending increase (both because unemployment should rise) and this softens the impact of the recession.