Why is fiscal policy sometimes considered inefficient for addressing short-term economic issues?

Fiscal policy is often seen as inefficient for addressing short-term economic issues primarily because it can take a long time to enact policy decisions. This delay arises from several factors, including the need for legislative approval, the complexities involved in crafting a fiscal response, and the time taken to implement changes once they are approved.

When economic crises occur, such as a recession or sudden downturns, rapid responses are usually needed to stabilize the economy. However, the bureaucratic processes and potential debates in legislative bodies can slow down the necessary actions, causing a lag between the recognition of the problem and the implementation of fiscal measures like government spending or tax changes. As a result, by the time these policies take effect, the economic conditions may have already changed, rendering the measures less effective in addressing the problem at hand.

This prolonged timeline contrasts with monetary policy, which can often be adjusted more swiftly by central banks to react to economic changes, thereby enhancing the overall responsiveness in addressing immediate economic challenges.