Who Gains From President Obama's Stimulus Package... And How Much?

The theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases. Under plausible conditions, the temporary case involves an output response that is positive, less than one-to-one with the change in government purchases, and larger than that generated by an equal-sized, but permanent, shift in purchases. The equilibrium real rate of return rises in the temporary case, but changes little in the permanent one. Defense purchases are divided empirically into "permanent" and "temporary" components by considering the role of (temporary) wars. No temporary shifts in nondefense purchases were isolated. Empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases. The results for some other expectational hypotheses are found to be generally supportive of the theory.

Economic Perspectives, 1998

China & World Economy, 2010

Using an input-output method, this paper simulates the impacts of the global financial crisis and the decline of exports on China's economy and employment. With shrinking external demand, boosting domestic demand becomes crucial for maintaining economic growth and promoting employment. Our simulated results indicate that an investment scenario with employment as a priority can achieve the objective of employment maximization without significantly reducing growth. Public investment should focus on employment, education, health, housing and social security to rebalance China's economy so that it can realize sustained and stable economic growth.

2009

Abstract: Using survey evidence, I estimate the impact of a $12 billion package of household payments delivered in Australia between March and May 2009. Forty percent of households who said that they received the payment reported having spent it. This is approximately twice the spending rate that has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States.

2021

2011

In the year 2008 and the first half of 2009, the world witnessed the unfolding and heavy repercussions of the global financial crisis which affected Vietnam, among others, through the reduction of investments inflow, lower global commodity prices and trade. The government of Vietnam has acted quickly with its stimulus package, including a 4% interest rate subsidy for enterprises with the objective of preventing the economy from falling further. While there are some anecdotal evidences about the effectiveness of the stimulus package, there is no systematic evidence of the impact of the stimulus package. This paper makes use of the PCI 2008 enterprise survey data, a unique dataset which is only recently made by available to investigate the impact of the 4% interest rate subsidy component of the stimulus package. We find strong statistical evidence that the 4% interest rate subsidy has positive and important impacts on the enterprises, easing the severe effects of the global crisis.

ATINER, 2022

My paper provides interim results of my PhD dissertation. I hypothesize that "Firms increase and decrease employment in response to changes in expected demand." The paper seeks to answer the question "What are the determinants of changes in aggregate employment in the United States of America [U.S.]?" This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for services at the very time that revenue is declining. The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.

Economics Letters, 1992

2009

As the nation watches the impact of the recent stimulus bill on job creation and economic growth, a group of academics continues to dispute the notion that the fiscal and job creation programs of the New Deal helped end the Depression. The work of these revisionist scholars has led to a public debate that has obvious implications for the controversy surrounding fiscal stimulus bills. Since we support a new stimulus package, one that emphasizes jobs for the 9.8 percent of the workforce that is currently unemployed, we have been concerned about this debate. We will use this policy note to outline our disagreements with recent unfavorable assessments of President Roosevelt's deficits, public works projects, and relief programs, having dealt with critiques of some other New Deal programs in a recent public policy brief (Papadimitriou and Hannsgen 2009). Because we are not economic historians and have tried our best to keep this note short, we cannot do justice to the academic literature on this subject, though we provide some references to this work. Rather, our purpose is to respond to arguments that have appeared frequently in magazines, newspapers, and other popular forums (e.g.,

2011

This study focuses on the employment effects of military spending versus alternative domestic spending priorities, in particular investments in clean energy, health care and education. We first present some simple alternative spending scenarios, namely devoting $1 billion to the military versus the same amount of money spent on clean energy, health care, and education, as well as for tax cuts which produce increased levels of personal consumption. Our conclusion in assessing such relative employment impacts is straightforward: $1 billion spent on each of the domestic spending priorities will create substantially more jobs within the U.S. economy than would the same $1 billion spent on the military. We then examine the pay level of jobs created through these alternative spending priorities and assess the overall welfare impacts of the alternative employment outcomes. We show that investments in clean energy, health care and education create a much larger number of jobs across all pay ranges, including midrange jobs (paying between $32,000 and $64,000) and high-paying jobs (paying over $64,000). Channeling funds into clean energy, health care and education in an effective way will therefore create significantly greater opportunities for decent employment throughout the U.S. economy than spending the same amount of funds with the military.

2020

This paper evaluates the effects of the economic reactions to the coronavirus crisis in Sweden, the United Kingdom and the United States of America. By using a structural vector autoregressive model we find the effect of a change in government spending, tax revenue and interest rates on GDP and unemployment. By calculating the effect found in historic data, we can estimate how the corona stimulus packages affect the economies of these three countries. Our results questions traditional theory, by indicating that increased government spending and tax cuts will have a negative effect on the economy.

2011

ABSTRACT This study focuses on the employment effects of military spending versus alternative domestic spending priorities, in particular investments in clean energy, health care and education. We first present some simple alternative spending scenarios, namely devoting $1 billion to the military versus the same amount of money spent on clean energy, health care, and education, as well as for tax cuts which produce increased levels of personal consumption. Our conclusion in assessing such relative employment impacts is straightforward: $1 billion spent on each of the domestic spending priorities will create substantially more jobs within the U.S. economy than would the same $1 billion spent on the military. We then examine the pay level of jobs created through these alternative spending priorities and assess the overall welfare impacts of the alternative employment outcomes. We show that investments in clean energy, health care and education create a much larger number of jobs across all pay ranges, including midrange jobs (paying between $32,000 and $64,000) and high-paying jobs (paying over $64,000). Channeling funds into clean energy, health care and education in an effective way will therefore create significantly greater opportunities for decent employment throughout the U.S. economy than spending the same amount of funds with the military.

SSRN Electronic Journal, 2011

We investigate empirically the effect of government purchases on unemployment in 20 OECD countries, for the period 1960-2007. Compared to earlier studies we use a data set with more variation in unemployment, and which allows for controlling for a host of factors that influence the effect of government purchases. We find that increased government purchases lead to lower unemployment; an increase equal to one percent of GDP reduces unemployment by 0.2 percentage point in the same year. The effect is greater in downturns than in booms, and also greater under a fixed exchange rate regime than under a floating regime. JEL-Code: E620, H300.

Working paper (Federal Reserve Bank of Cleveland)

This paper studies the macroeconomic effects of seven key TCJA provisions, including the tax cuts for individuals and businesses, the bonus depreciation of equipment, the amortization of R&D expenses, and the limits on interest deductibility. I use a dynamic general equilibrium model with interest deductibility and accelerated depreciation. I find that, initially, the tax reform had a small positive impact on output and investment. In the medium term, however, the effect on output will diminish, and the effect on investment will turn negative. The tax reform will depress investment in R&D. Government debt will surge.