The Great Moderation consensus is the school of thought that monetary policy should be the main tool of stabilization policy and is sceptical about the use of fiscal policy.

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The Great Moderation consensus is indeed a school of thought that emphasizes the role of monetary policy in stabilizing the economy and is often critical of the use of fiscal policy. This view gained prominence in the 1990s and early 2000s, as many believed that central banks had become better able to manage the business cycle through interest rate adjustments and other monetary tools. However, this consensus has been challenged in recent years, as some argue that fiscal policy may play a more important role in certain circumstances, such as during a period of stagnant economic growth or when interest rates are already very low.

The Great Moderation Consensus Is the School of Thought That