So there's no good economic topic that doesn't come with some criticism as well. Let's see the criticism that goes with fiscal policy. The government's fiscal policy can be ineffective because of a time lag. We're trying to think of reasons that fiscal policy would not work. Okay? There's a time lag when it comes to fiscal policy when compared to monetary policy. With fiscal policy, there's a recognition lag. First, we have to be able to recognize that we're in a recession. Excuse me. We have to recognize we're in a recession at the beginning of a recession and be aware of its existence. Sometimes, it takes up to 4 to 6 months to realize that we are in a recession because there might be some small decreases in the market, and we're not sure if this is just a temporary fix or if it's an actual long sustained recession, okay?
So there's this recognition lag before they can actually say, "Hey, we're in a recession. We need to react to this." That's the recognition lag, recognizing we're in a recession. And then there's the operational lag. So the time between the approval of fiscal policy and its impact on the economy. Some fiscal policies can take a while, right? There are bills that might take a while to go through Congress. So that's already a lag in the time that we need to make this bill and the time for all of the senators and the representatives to actually agree on the bill. However, let's say that it happens quickly. They're able to agree we're in a recession, we need to make some changes. Let's say that the tax policy can be put into effect relatively quickly. However, government spending, even if it's approved, can take 6 to 12 months just to take effect, right? Now that it's been approved, well, they've got to hire contractors, they've got to plan out the project, and it can take a long time before the project actually starts and that government spending actually starts to get the wheels in motion.
So that's the operational lag that we see when it comes to the fiscal policy as well. It takes a while for it to kick in, right? Let's pause here and let's discuss the next criticism of fiscal policy.