BEYOND AUSTERITY Vs.STIMULUS: EVALUATING THE EFFICACY OF AUTOMATIC FISCAL STABILIZERS FOR LONG TERM DEFICIT MANAGEMENT

The perennial debate on fiscal policy remains starkly binary, oscillating between the perils of austerity and the risks of prolonged stimulus. This polarized discourse, plagued by political delays and pro-cyclical biases, fails to provide a sustainable pathway for long-term deficit management. While automatic fiscal stabilizers (AS)-built-in features like progressive taxes and unemployment benefits-are well-established as effective short-term macroeconomic stabilizers, their efficacy as a core institution for long-term fiscal health remains a critical and unaddressed gap in the literature. This research proposes a paradigm shift, moving beyond the austerity versus stimulus dichotomy to rigorously evaluate whether robust AS regimes lead to superior long-term deficit management outcomes. Employing a mixed-methods approach, the study combines a quantitative panel regression analysis of 30 OECD countries (1990-2020) with qualitative comparative case studies (e.g., Germany vs. Italy). It hypothesizes that stronger automatic stabilizers causally improve long-term fiscal health by reducing structural deficits, stabilizing debt-to-GDP ratios, and mitigating pro-cyclical austerity through a "legitimacy effect." The findings are expected to provide a validated policy toolkit, arguing that institutionalizing automatic stabilizers is not merely a social policy but a foundational strategy for achieving sustainable and resilient fiscal governance in an era of persistent economic shocks.