Tradable Spillovers of Fiscal Policy: Evidence from the 2009 Recovery Act

Peter B McCrory

Institute for Research on Labor and Employment, Working Paper Series from Institute of Industrial Relations, UC Berkeley

Abstract: Local fiscal policy shocks propagate between labor markets through the trade in intermediate goods used in final production. Through this channel, each $1 of local aid from the 2009 Recovery Act increased output by $1.33 in the rest of the country over two years, in addition to its local state-level effect of $1.46. Combining both the local and spillover effects, absent other offsetting forces, the implied aggregate multiplier from the Recovery Act was approximately 2.8. A sectoral decomposition of the direct and spillover effects is consistent with the spillover effects being mediated through the trade in intermediate goods.

Keywords: Social and Behavioral Sciences; fiscal policy; spillover effects; labor markets; recession (search for similar items in EconPapers)
Date: 2020-07-21
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (7)

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