In the face of recent economic crisis, the need for fiscal stimulus has been emphasized across the world. We thus attempt to address some important principles in order to adopt fiscal stimulus as follows.
First, we examine the necessary conditions under which fiscal stimulus is appropriate. In general, fiscal stimulus measures are appropriate in case of serious economic recession. Second, we analyze three important principles of fiscal stimulus that have been advocated in USA.


These principles are that fiscal stimulus should be timely, targeted and temporary, referred to as 3T. Firstly, government should act in a timely manner to lessen any economic recession. Secondly, policymakers should ensure that tax cuts or higher spending raise output in the short run targeting on the families that are most vulnerable in weakening economy.

Finally, fiscal stimulus measures, such as tax or spending, should be cut or raised in order to promote output in the short run. Then, we evaluate these principles applied to the case of USA in a bid to examine their effectiveness. We found some policy areas that are potentially most effective include temporary and refundable tax credits, temporary increases in food stamp and a temporary extension of unemployment insurance benefits. Finally, we provide some policy considerations when the Korean government introduces the fiscal stimulus measures.