Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250544 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14883
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
In response to the record-breaking COVID19 recession, many governments have adopted unprecedented fiscal stimuli. While countercyclical fiscal policy is effective in fighting conventional recessions, little is known about the effectiveness of fiscal policy in the current environment with widespread shelter-in-place ("lockdown") policies and the associated considerable limits on economic activity. Using detailed regional variation in economic conditions, lockdown policies, and U.S. government spending, we document that the effects of government spending were stronger during the peak of the pandemic recession, but only in cities that were not subject to strong stay-at-home orders. We examine mechanisms that can account for our evidence and place our findings in the context of other recent evidence from microdata.
Subjects: 
COVID-19
fiscal multiplier
stimulus
JEL: 
E62
E32
H3
Document Type: 
Working Paper

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