---
title: "Automatic Stabilisers: Fiscal Policy Explained"
description: "Automatic stabilisers are taxes and transfers that cushion the business cycle without new laws, unlike discretionary stimulus—key for UPSC GS3 fiscal policy."
url: "https://modeldiplomat.com/learn/glossary/automatic-stabilisers"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Automatic stabilisers are fiscal mechanisms—chiefly progressive taxes and transfer payments—that adjust government revenue and spending counter-cyclically without new legislation.
- How do automatic stabilisers differ from discretionary fiscal policy?
- Why are automatic stabilisers weaker in developing economies like India?
- What is the relationship between automatic stabilisers and the structural deficit?
- Can automatic stabilisers be undermined by fiscal rules?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

Automatic stabilisers are fiscal mechanisms—chiefly progressive taxes and transfer payments—that adjust government revenue and spending counter-cyclically without new legislation.

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During the 2008–09 financial crisis, the European Commission urged member states in its 2009 European Economic Recovery Plan to "let the automatic stabilisers work" before deploying discretionary stimulus.

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