National Fiscal Policies to Fight Recessions in US States

Karen Dynan and Douglas Elmendorf

AEA Papers and Proceedings, 2020, vol. 110, 131-36

Abstract: Countercyclical fiscal policy generally focuses on national economic downturns. But US states experience significantly different patterns of unemployment, and demand shocks appear to drive much of that variation. State budget rules limit the ability of states to mount their own countercyclical policies. Federal taxes and spending programs have countercyclical effects within states, but the magnitude of those effects depends on policies that were designed based on other considerations (just as the extent of national automatic stabilizers is the result of policies based on other considerations). Enacting countercyclical fiscal policy calibrated to state unemployment rates would reduce the cost of recessions.

JEL-codes: E32 E62 H71 H72 R23 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pandp.20201076 (application/pdf)
https://doi.org/10.3886/E119742V1 (text/html)
https://www.aeaweb.org/doi/10.1257/pandp.20201076.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:apandp:v:110:y:2020:p:131-36

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/subscribe.html

DOI: 10.1257/pandp.20201076

Access Statistics for this article

AEA Papers and Proceedings is currently edited by William Johnson and Kelly Markel

More articles in AEA Papers and Proceedings from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert (mpa@aeapubs.org).