Question

Deficit hawk, deficit dove or deficit owl

a)     Which one is better?

b)     What are the criticisms of these perspectives?

c)     Which criticisms are valid?

Answer 1

1. Which one is better?

Deficit hawk: it calls for reducing expenditure and increase taxes.

Deficit dove: it calls for expansionary fiscal policy until economy recovers from recession.

Deficit owl: it does not care about deficit even in good time. It considers deficit as integral part of economic growth.

Deficit dove is practically considered better, as it calls for expansionary fiscal policy during the recession and supports contractionary ones through the boom period.

1. What are the criticisms of these perspectives?

• We cannot select any of above without any limitations. There are some negatives associated with such policies. Deficit hawk cannot be carried out during the recession and similarly deficit owl is not better option either through boom period.
• Judging precise time to follow deficit dove is not easy task. What level of unemployment should be considered to follow deficit dove?

1. Which criticisms are valid?

• Criticisms leveled against the hawk and owls are considered valid and logical. These policies do not respond to the changed economic conditions and requirements.