Procyclical and countercyclical

Procyclical and countercyclical are terms used to describe how an economic quantity is related to economic fluctuations. Their meanings may vary with regard to business cycle theory and economic policy making.

The terms are often used loosely to describe a government's approach to spending and taxation. A 'procyclical fiscal policy' can be summarised simply as governments choosing to increase public spending and reduce taxes during an economic boom, but reduce spending and increase taxes during a recession. A 'countercyclical' fiscal policy refers to the opposite approach: reducing spending and raising taxes during a boom period, and increasing spending/cutting taxes during a recession.