Fiscal policy: Samuelson and Nordhaus, in their text Economics (1998), define fiscal policy as follows: A government's program with respect to

Fiscal policy: Samuelson and Nordhaus, in their text Economics (1998), define fiscal policy as follows: A government's program with respect to (1) the purchase of goods and services and spending on transfer payments, and (2) the amount and type of taxes.

Over the past year the U.S. budget has shifted from a surplus to a deficit, in part as a result of changes in fiscal policy. A combination of tax reductions, increased spending, and the 2001 recession caused the shift. The tax cuts and increased spending are part of the government's fiscal policy that is designed to increase short-run economic growth. For an update on the state of the U.S. budget in 2002, please review the FRB SF Economic Letter by Carl E. Walsh titled, "The Changing Budget Picture."

In addition, the Congressional Budget Office prepares a "Monthly Budget Review" that evaluates current tax receipts and spending outlays and compares estimated and actual budget figures.