Comparing and contrasting automatic fiscal and monetary stabilizers Automatic fiscal stabilizers are very effective in dampening an output cycle. But they offset only part of the change in output. In contrast, monetary policy can fully offset a change in output, but it takes time to work, with the full impact on output normally felt only after 12 to 18 months.
This is essential if the financial markets are to work more effectively and in particular resume their key function of helping to finance the recovery including through lending to small firms.