On the Ease of Overstating the Fiscal Stimulus in the Us, 2008-9

16 Pages Posted: 1 Mar 2010 Last revised: 17 Feb 2023

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics

Gurnain Kaur Pasricha

International Monetary Fund

Date Written: February 2010

Abstract

This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean. We discuss the implications of 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.

Suggested Citation

Aizenman, Joshua and Pasricha, Gurnain Kaur, On the Ease of Overstating the Fiscal Stimulus in the Us, 2008-9 (February 2010). NBER Working Paper No. w15784, Available at SSRN: https://ssrn.com/abstract=1560919

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall 300
Los Angeles, CA 90089
United States

Gurnain Kaur Pasricha

International Monetary Fund ( email )

United States

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