Automatic stabilizer

Automatic stabilizer is a tax and spending rule that have the effect of increasing aggregate demand when the economy slows down and restraining aggregate demand when the economy speeds up, without any additional change in legislation.

Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Automatic stabilizer. Tax and spending rule that have the effect of increasing aggregate demand when the economy slows down and restraining aggregate demand when the economy speeds up, without any additional change in legislation.

According to Macroeconomics by Mankiw (7th edition),

Automatic stabilizer. A policy that reduces the amplitude of economic fluctuations without regular and deliberate changes in economic policy; for example, an income tax system that automatically reduces taxes when income falls.