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The Role for Discretionary Fiscal Policy

The coefficient of this relationship indicates the magnitude of the response of the surplus to GDP that is embodied in the CBOĂs calculation of the full-employment surplus.÷ (Auerbach, 2002, p. 10).

Since Nike is a company with a strong presence in Japan, an article on AuerbachĂs article by Fumio Hayashi, one of AuerbachĂs discussants, is relevant to this analysis. HayashiĂs article, titled ˘Commentary: Is There a Role for Discretionary Fiscal Policy?÷ agrees in the larger sense with AuerbachĂs but makes some minor adjustments to bring AuerbachĂs points in lind with JapanĂs ebonomy. Hayashi points out that the SVAR multiplier is much higher for Japan than for U.S., so it is likely that a large tax cut would relieve the long Japanese recession. He also states that ˘The paperĂs finding that discretionary policy is countercyclical is somewhat surprising, given the general perception that the United States no longer practices Keynesian stabilization fiscal policy.÷ (Hayashi, 2002, p. 165). Hayashi also points out that fiscal variables are sensitive to GDP and cites the governmentĂs GDP forecast error as a significant variable. Since actual GDP growth is not known until several months after the end of the fiscal year, the impact of the gap between the forecast and the actual does not manifest until then. This is a loose end that can cause difficulties in the fiscal policy. Overall, however, he agrees with most of AuerbachĂs assertions, arguing in the end that one change he would propose would be to change the title from ˘Is There A Role for Discretionary Fiscal Policy?÷ to ˘Is There A Role for Stabilization Fiscal Policy?÷

The effect of the information in these two articles on Nike is subjective, of course, but can be summarized by saying that fiscal po


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The Role for Discretionary Fiscal Policy. (1969, December 31). In Retrieved 20:29, August 30, 2016, from
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