Summary of How Much Consumption Responds to Government Stimulus

Looking for the report?
We have the summary! Get the key insights in just 5 minutes.

How Much Consumption Responds to Government Stimulus summary
Start getting smarter:
or see our plans

Rating

8

Qualities

  • Analytical
  • Overview
  • Hot Topic

Recommendation

Policy makers can wield multiple types of government stimulus: tax cuts, transfer payments and direct spending into the economy. However, some programs drive greater economic activity than others. Economists Marios Karabarbounis, Marianna Kudlyak and M. Saif Mehkari assess the specific efficacy of direct spending via federal contracts under the 2009 American Recovery and Reinvestment Act. getAbstract recommends this eye-opening report to economists, policy experts and anyone interested in the effects of government spending on the economy.

About the Authors

Marios Karabarbounis is an economist at the Richmond Federal Reserve. Marianna Kudlyak is a research adviser at the San Francisco Fed. M. Saif Mehkari is an associate professor of economics at the University of Richmond.

 

Summary

According to economic models, direct government spending into an economy creates a multiplier effect, boosting consumer activity and spurring GDP growth. In an attempt to temper the pernicious effects of the Great Recession, the federal government’s American Recovery and Reinvestment Act (ARRA) deployed $787 billion in fiscal stimulus from 2009 to 2012. The legislation relied on a mix of “tax benefits, social entitlements and federal contracts” as the proposed remedy. Officials earmarked $228 billion for projects in “education, transportation...


More on this topic

Customers who read this summary also read

The American Economy
7
Fiscal Therapy
8
An Economist Explains What Happens If There’s Another Financial Crisis
8
The Financial Crisis and the Free Market Cure
7
The Global Competitiveness Report 2019
9
Behavioral Development Economics
8

Related Channels

Comment on this summary