Does stimulus displace private economic activity?

According to Keynesian economic theory, many recessions have little or nothing to do with underlying (structural) economic problems. Instead, recessions are the result of a crisis in confidence. People are simply freaked out and therefore not spending. And when they are not spending, others are not earning income and so the economy suffers. Keynesians argue […]

Does Stimulus Work?

Dylan Matthews has a fascinating post over at the Washington Post Wonkbook. He surveys 15 studies of fiscal stimulus and concludes that 13 of them found a positive effect. Let me begin, as Pete Boettke does, by congratulating Mr. Matthews on his approach. He is reasoned, restrained, and apparently interested in looking at the facts. […]

Net Worth is Down and that May Explain Why Stimulus Wasn’t Particularly Effective

This week saw the release of the Federal Reserve’s Survey of Consumer Finances. The news isn’t good. Median net worth fell 38.8 percent from 2007 to 2010. Predictably, the unhealthy diagnosis has occasioned a healthy dose of political posturing. For its part, the White House was quick to note that “the entire decline in household […]

It Isn’t Easy to Count Stimulus Jobs

The 1603 program gave $10.7 billion to 5,098 businesses for 31,540 projects, according to the Treasury Department. Recipients were generally reimbursed 30% of their costs after projects were finished. Those businesses claimed on federal applications that they created 102,883 jobs directly. But the Journal found evidence of far fewer. About 40% of the funding, $4.3 […]

A Nobelist on Fiscal Stimulus

Tyler Cowen and Ira Stoll both link to an interview of new-Nobelist Thomas Sargent by Art Rolnick of the Minneapolis Fed. Here is the Nobel Laureate on fiscal stimulus: In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. […]

The Political Economy of Infrastructure Stimulus

Economists have long recognized the value of infrastructure. Roads, bridges, airports, canals, and other projects are the conduits through which goods are exchanged. In many circumstances, private firms can and should be allowed to provide this infrastructure. But in other cases, there may be a role for public provision at the local level. But whatever […]

How Much did the Stimulus II Spend to Get Broadband Into Homes?

Nick Schulz writes: Eisenach and Caves looked at three areas that received stimulus funds, in the form of loans and direct grants, to expand broadband access in Southwestern Montana, Northwestern Kansas, and Northeastern Minnesota. The median household income in these areas is between $40,100 and $50,900.  The median home prices are between $94,400 and $189,000. […]

Is Boosting Teacher Pay a Legitimate Use of the Stimulus?

That is the question raised by a recent headline from Fairfax County: “Fairfax Teachers Fight for Raises Funded by Stimulus” Now I don’t know whether teachers in Fairfax are underpaid or overpaid. And there may very well be good reason to boost their salaries (or at least to boost those of the top performers). But […]

What if Stimulus Works, But Government Can’t Get the Timing Right?

As of September 3, 2010, about $154.8 billion of the approximately $282 billion of total funds made available by the Recovery Act in 2009 for programs administered by states and localities had been paid out by the federal government. That’s the conclusion of a new GAO report, out this week. Similarly, the Wall Street Journal […]