Does Fiscal Stimulus Cause Too Much Debt&quest

Laurence Seidman and Kenneth Lewis

Business Economics, 2009, vol. 44, issue 4, 205 pages

Abstract: This study distinguishes between temporary fiscal stimulus to combat a recession and two other debt-raising policies: financial bailouts and spending on Medicare, Medicaid, and Social Security. Two striking conclusions emerge from our simulations of the impact of a temporary fiscal stimulus on the economy. First, the fiscal stimulus effectively mitigates the recession. Second, debt as a percentage of GDP is only slightly greater with the fiscal stimulus than it would be without the stimulus.

Date: 2009
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