What is the difference between automatic fiscal stabilizers and discretionary fiscal policy?

What is the difference between automatic fiscal stabilizers and discretionary fiscal policy Introduction: Navigating Economic Fluctuations Hello, everyone! In the realm of economics, the stability of a nation's economy is of paramount importance. However, economic fluctuations are an inherent part of any system. From booms to recessions, the economy is subject to various ups and downs. To mitigate the adverse effects of these fluctuations, policymakers employ various strategies, including fiscal policy. Today, we'll be focusing on two key approaches: automatic fiscal stabilizers and discretionary fiscal policy. Automatic Fiscal Stabilizers: The Built-In Mechanism Automatic fiscal stabilizers, as the name suggests, are pre-existing mechanisms within the fiscal framework that automatically respond to changes in the economy. These stabilizers are typically in the form of tax and transfer systems. Let's take a closer look at how they function. During an economic downturn, such as a recession, the government's revenue from taxes naturally declines. At the same time, there is an increased demand for social welfare programs, such as unemployment benefits. Automatic fiscal stabilizers kick in during such times, without the need for any explicit action from policymakers. The tax system, for instance, may have progressive elements, where the tax rates are higher for higher-income individuals. This means that during a recession, when incomes are generally lower, the overall tax burden reduces, providing some relief to individuals and businesses.