Re-evaluation the stabilization function of the fiscal policy

The fiscal–monetary policy mix has been used as anticyclical tools in the stabilization policy. In the làst 10-15 years, the monetary policy became neutral and the fiscal policy transformed into pro-cyclical. As a result, large budget deficit emerged during the economic boom, which required debt financing and led to accumulation of significant government debt. Many countries have entered into debt fiscal crises. For going out of the vicious circle: permanent budget deficit, debt funding and growing public debt, changes are proposed in the model of conducting fiscal policy: creation of the fiscal reserves during economic upsurge, which has to be used for stimulating aggregate demand during crisis, instead debt financing; accepting the fiscal rules in order to discipline politicians in their fiscal decisions; accepting the low level of budget deficit in time of crisis, which has to be reached by budget expenditure cuts, instead tax rate increase. There are sufficient fiscal consolidation programmes, which testified the correctness of these changes, launched as optimal fiscal policy.