Finantspolitiikka

Finantspolitiikka, often translated as fiscal policy, refers to the use of government spending and taxation to influence the economy. It is a key tool governments employ to achieve macroeconomic objectives such as stable economic growth, full employment, and low inflation. The primary instruments of fiscal policy are government expenditure and revenue generation.

Government expenditure can be increased to stimulate demand during economic downturns. This can include spending on infrastructure projects, social programs, or defense. Conversely, during periods of economic overheating, governments may reduce spending to cool down the economy and prevent excessive inflation. Taxation levels also play a crucial role. Lowering taxes can boost consumer and business spending, encouraging economic activity. Raising taxes, on the other hand, can reduce aggregate demand and help curb inflation.

Fiscal policy can be categorized as either expansionary or contractionary. Expansionary fiscal policy involves increasing government spending or decreasing taxes, aiming to stimulate economic growth. Contractionary fiscal policy involves decreasing government spending or increasing taxes, aiming to slow down an overheated economy. The effectiveness and appropriate use of fiscal policy are subjects of ongoing debate among economists, with considerations including the potential for government debt accumulation and the timing and impact of policy changes.