Recognizing the Need for Action: Lagging Economy and Expansionary Fiscal Policy

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One of the primary problems with fiscal policy is one of timing. Any stimulus package would take time to work its way through the economy. For example, if unemployment were high and the government passed fiscal policy legislation involving many new hires, it would take time for the new employees to be hired, then they would go through training, and probably not begin productive work for many months. Furthermore, the new income the employees now receive would be spent on goods, which would become income for other individuals, etc. This creates a multiplier effect over time. How long this will take to be fully realized is impossible to determine.