Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280652 
Year of Publication: 
2023
Series/Report no.: 
AEI Economics Working Paper No. 2022-05
Version Description: 
Updated November 2023
Publisher: 
American Enterprise Institute (AEI), Washington, DC
Abstract: 
We use an instrumental-variables estimator reliant on variation in congressional representation to analyze the effects of federal aid to state and local governments across all four major pieces of COVID-19 response legislation. Through December 2022, we estimate that the federal government allocated $603,000 for each state or local government job-year preserved. Our baseline confidence interval allows us to rule out estimates of less than $220,400. Our estimates of effects on aggregate income and output are centered on zero and imply modest if any spillover effects onto the broader economy. We discuss aspects of the pandemic context, which include the surprising resilience of state and local tax revenues as well as of broader macroeconomic conditions, that may underlie the small employment and stimulative effects we estimate in comparison with previous research.
Document Type: 
Working Paper

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