Did the Stimulus Stimulate? Real Time Estimates of the Effects of the American Recovery and Reinvestment Act

NBER Working Paper No. 16759

Issued in February 2011, Revised in December 2011

NBER Program(s):Economic Fluctuations and Growth, Monetary Economics



We use state and county level variation to examine the impact of the American Recovery and Reinvestment Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about $400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration. However, the overall results mask considerable variation for different types of spending. Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000.

A non-technical summary of this paper is available in the July 2011 NBER Digest. You can sign up to receive the NBER Digest by email.



Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16759

Users who downloaded this paper also downloaded* these: