That said, however, there is no case for fiscal activism. There is considerable evidence showing that fiscal policy can only contribute little, if anything, to stabilising economic activity, given the lags in the decision-making process and the time needed to fully affect economic activity.
Furthermore, it should be borne in mind that the possible short-term benefits resulting form the conduct of an activist fiscal policy may be outweighed by developments in long-term interest rates which might react adversely to the risks of a worsening in fiscal prospects.