Abstract

Decision Lags of Discretionary Fiscal Policy: Defects of Construction or Element of a Rational Policy

There are proposals to shorten the decision lags of discretionary fiscal policy by institutioning stabilization policies by rules. It can be shown, however, that these concepts may be irrational from a higher aggregated social viewpoint which regards not only stabilization but all social goals, because the disputed action lags result from the cost of stabilization policy, which are the losses of other non-stabilization targets concerning the interest of groups aiming at these non-stabilization targets. As there is no possibility to construct the social welfare function there is no possibility to compare the gains and losses of public actions concerning different targets. Stabilization policy by rules does not regard other than stabilization effects and therefore implicates that a policy for pricestability has only gains. As a possible solution of the problem to compare goals with different qualities it is proposed to come to a concept of policies resulting from a rational decision-process. The criteria for measuring the rationality of this decision-process may be drawn from the constitution