Automatic stabilizers

Automatic stabilizers refer to the built-in fiscal devices ensuring deficit in recession and suplus during booms. Automatic stabilizers can minimize the timing problem.

Progressive income taxes

• Drop out from tax rolls during downturn and add to it during booms

Corporate taxes

• Taxes on corporate profits go up substantially during boom times, and decline rapidly during times of recession.

Unemployment benefits (need- tested spending)

• More money is paid out when more people is unemployed.