Macroeconomic equilibriums, crises and fiscal policy

Macroeconomic crises are common as well economically, socially and politically costly. Fiscal policy plays an important role in alleviating the costs of crisis. However, recent experiences suggest that public finances often unprepared for a Deficits debt levels prior to crisis commonly too high, limiting government’s ability support economy through recovery phase. In this article, I argue theoretical macroeconomic models’ underlying assumption stable long-run equilibrium may partially explain why governments fail prepare future standard models, seen one-off events caused by external factors, which creates false impression economic stability. The models thus indirectly indicate there is no need potential Using forecast data, demonstrate how perspective dominates thinking it contributes too-high ratios end article discussing design fiscal rules based on rather than perspective.