Study on fiscal policy advocates for making hay while the sun shines

A study published in Economic Inquiry that examined data from 133 countries from 1950-2014 found that a reduction in fiscal space—with fiscal space being the ability of governments to provide resources without undermining fiscal sustainability—in high income countries following the global financial crisis in 2007-2009 prevented these economies from adopting countercyclical fiscal policies. A countercyclical fiscal policy stance aims to smooth out business cycle fluctuations, through greater spending during recessions and lower spending during booms.