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Fiscal Action to Influence Employment and the Price Level: Some Criteria

By: C. Lowell Harriss

Download Government Finance Brief No. 4 (new series)

Government Finance Brief No. 4 (new series)


The current debate on Federal fiscal actions to help stem inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. ary pressures while paying for the war in South Vietnam revolves around the relative merits of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increases or expenditure reductions. This pamphlet, fourth in a new series, furnishes some background for the current debate. It examines fiscal versus monetary policy and the problems of timing any needed actions.

This Brief consists of the major part of a statement made to the Subcommittee on Fiscal Policy of the Joint Congressional Economic Committee on March 16 by C. Lowell Harris, the Foundation’s Economic Consultant and Professor of Economics at Columbia University. The views expressed are Mr. Harriss’ own.