On the ease of overstating the fiscal stimulus in the US, 2008-9

Joshua Aizenman and Gurnain Pasricha

Santa Cruz Department of Economics, Working Paper Series from Department of Economics, UC Santa Cruz

Abstract: This note shows that the aggregate fiscal expenditure stimulus in the United States, properlyadjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. Whilethe Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it didnot stimulate the aggregate expenditure above its predicted mean. We discuss the implicationsof limitations on states' ability to run deficits for the design of fiscal stimulus at the federal level.We devote particular attention to intertemporal moral hazard concerns in a federal fiscal system,and ways to address these concerns.

Keywords: Social and Behavioral Sciences; fiscal union; federal fiscal expenditure; fiscal policy; moral hazard (search for similar items in EconPapers)
Date: 2010-02-02
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Citations: View citations in EconPapers (7)

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Working Paper: On the ease of overstating the fiscal stimulus in the US, 2008-9 * (2010)
Working Paper: On the ease of overstating the fiscal stimulus in the US, 2008-9 (2010)
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