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Title:On the ease of overstating the fiscal stimulus in the US, 2008-9 PDF Logo
Authors:Aizenman, Joshua
Pasricha, Gurnain Kaur
Issue Date:2010
Series/Report no.:Working Papers, Santa Cruz Center for International Economics 10-04
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.
Subjects:fiscal union
federal fiscal expenditure
fiscal policy
moral hazard
JEL:E62
F36
H77
Document Type:Working Paper
Appears in Collections:Working Papers, Santa Cruz Institute for International Economics, UC Santa Cruz

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