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The Net Fiscal Expenditure Stimulus in the U.S., 2008-9: Less than What You Might Think, and Less than the Fiscal Stimuli of Most OECD Countries

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  • Aizenman, Joshua
  • Pasricha, Gurnain

Abstract

Understanding how the economy reacted to fiscal stimulus in the aftermath of the deepest recession of the last fifty years is essential. Joshua Aizenman of the University of California, Santa Cruz, and Gurnain Kaur Pasricha of the Santa Cruz Institute for International Economics and the Bank of Canada show that aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. Furthermore, the USA is ranked at the bottom third in terms of the rate of expansion of the consolidated government consumption and investment of the 28 OECD countries they studied recently.
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  • Aizenman, Joshua & Pasricha, Gurnain, 2011. "The Net Fiscal Expenditure Stimulus in the U.S., 2008-9: Less than What You Might Think, and Less than the Fiscal Stimuli of Most OECD Countries," Santa Cruz Department of Economics, Working Paper Series qt9sr9m8wt, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt9sr9m8wt
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    1. Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Végh, 2005. "When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Chapters, in: NBER Macroeconomics Annual 2004, Volume 19, pages 11-82, National Bureau of Economic Research, Inc.
    2. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 75-122, National Bureau of Economic Research, Inc.
    3. Aizenman, Joshua & Pasricha, Gurnain K., 2010. "On the ease of overstating the fiscal stimulus in the US, 2008-9 ," Santa Cruz Department of Economics, Working Paper Series qt3vr12659, Department of Economics, UC Santa Cruz.
    4. von Hagen, Jurgen & Eichengreen, Barry, 1996. "Federalism, Fiscal Restraints, and European Monetary Union," American Economic Review, American Economic Association, vol. 86(2), pages 134-138, May.
    5. Carlos De Resende & René Lalonde & Stephen Snudden, 2010. "The Power of Many: Assessing the Economic Impact of the Global Fiscal Stimulus," Discussion Papers 10-1, Bank of Canada.
    6. Cogley, Timothy & Nason, James M., 1993. "Impulse dynamics and propagation mechanisms in a real business cycle model," Economics Letters, Elsevier, vol. 43(1), pages 77-81.
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    Cited by:

    1. Joshua Aizenman & Gunnar Gunnarsson, 2015. "Fiscal Challenges in Multilayered Unions: An Overview and Case Study," Social Sciences, MDPI, vol. 4(2), pages 1-20, May.
    2. Nicolaas Groenewold, 2012. "Australia and the GFC: Saved by Astute Fiscal Policy?," Economics Discussion / Working Papers 12-28, The University of Western Australia, Department of Economics.
    3. Joshua Aizenman & Gurnain Kaur Pasricha, 2013. "Special Issue. Guest Editor: Zhihao Yu," Review of Development Economics, Wiley Blackwell, vol. 17(3), pages 397-413, August.

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