Jury Decision Alyssa Pierce, Max Hoffman, Daryl Shaw, Kaitlyn Lannan, Camille Darko, Jessica Zawadzki, Ariane Dalarun, Braelyn Wood

The Decision ● After careful deliberation, the jury has decided to support the absence of fiscal rules on the basis that a lack of fiscal policy rules allows better management of crises

The New Deal ● The use of fiscal targeting allows a government to react efficiently and effectively to a crisis, the most prominent example of which is The New Deal

Recency Bias ● Politicians and policy-makers tend to underestimate the likelihood of another major crisis happening due to recency bias ● Fiscal rules may work within an economy operating normally, but cause more problems than they solve when crises occur

Rigidity ● Fiscal rules are rigid and restrict stimulus

spending too much o o

With fiscal rules, any “trickle down” effects may not be felt by the entire population Fiscal rules cause slow reactions in times of crisis  Ex: EU’s reaction to the 2008 economic crisis

The United States ● The United States’ lack of fiscal rules: o o

Allowed a quicker recovery from the recession Allow the Federal Reserve Board to direct the economy in a manner that reacts to current events

● Whereas... o

Fiscal rules prevent the ECB from exercising its economic abilities with maximum efficacy

Issues with Pro-Fiscal Argument ● Fiscal capacity o

Does not address the fact that different shocks must be remedied with different methods

● Variety of rules from supernational to regional and subnational level o

Would worsen inexpediency of fiscal rules by bureaucratizing economic recovery

Golden Rule Paradigm ● The jury feels that the Golden Rule Paradigm is overrated, countries that do not respect it can perform well o o

Germany Japan

Trust and Credibility ● Discretionary economic policies can create trust and credibility in the economy o

Americans view the Fed in a better light than Europeans view the ECB