Countercyclical

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Countercyclical (or counter-cyclical, Activist policies) is a term that describes policies or economic effects that work against cyclical tendencies in the economy.^[1] For example, if the economy were on an upswing, policies or effects described as countercyclical would ostensibly cool down the economy. Conversely, when the economy is in a downturn, such policies or effects would ideally stimulate the economy.^[2]

Keynesian Economics advocate the use of discretionary countercyclical fiscal policies to lessen the impact of the business cycle. Other schools of economic thought, such as monetarism and rational expectations, hold that countercyclical policies are counterproductive or destabilizing, and favor a laissez-faire fiscal policy as a better method for maintaining overall economic health.

[edit] See also

• Business cycle
• Procyclical

[edit] Notes

1. ^ Fiscal Policy
2. ^ The Role for Discretionary Fiscal Policy in a Low Interest Rate Environment, Martin Feldstein, NBER Working Paper No. 9203, September 2002 abstract