The effectiveness of fiscal and monetary stimulus in depressions

Barry Eichengreen, Kevin Hjortshøj O’Rourke, Miguel Almunia, Agustín S. Bénétrix, Gisela Rua 18 November 2009

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The debate over the effectiveness of stimulus rages on (Barro and Redlick 2009). Fewer than two years of data – that being the amount of time since monetary and fiscal measures to counter the crisis were put in place – are not enough to pin down the effects. And different theoretical models, for better or worse, predict different results. Strongly held priors rule the roost.

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Topics:  Macroeconomic policy

Tags:  Great Depression, global crisis, stimulus

Design and effectiveness of fiscal-stimulus programmes

Robert Barro, Charles Redlick 30 October 2009

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The global recession of 2008-09, one of the longest and deepest since the Great Depression, has made the efficacy of fiscal-stimulus packages one of the most prominent policy debates in economics today. These packages typically attempt to smooth out business-cycle fluctuations through a combination of increased government purchases of goods and services (to replace falling private demand) and tax cuts or rebates.

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Topics:  Macroeconomic policy

Tags:  fiscal policy, global crisis, stimulus, expenditure multiplier

Eurozone stimulus: A myth, some facts, and impact estimates

Volker Wieland 05 September 2009

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Fact: Fiscal stimulus packages put together by Eurozone governments were much smaller than the US package (American Recovery and Reinvestment Act, ARRA).

Announcements of discretionary fiscal measures by Eurozone governments only add up to about 1% of GDP in 2009 and a little less in 2010. The $787 billion stimulus by the US government amounts to over 5% of US GDP.

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Topics:  Macroeconomic policy

Tags:  monetary policy, fiscal policy, stimulus

Why we need not fear that a bigger stimulus will be counterproductive

J. Bradford DeLong 16 March 2009

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My favourite line from Jaws is uttered police chief Martin Brody (Roy Scheider) when he finally sees the shark: “You are going to need a bigger boat.”

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Topics:  Macroeconomic policy

Tags:  US, global crisis debate, stimulus, fear

A lot of bucks, but how much bang?

Richard Clarida 16 March 2009

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“We have involved ourselves in a colossal muddle, having blundered in control of a delicate machine, the workings of which we do not understand” - John Maynard Keynes, “The Great Slump of 1930”, published December 1930.

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Topics:  Global crisis

Tags:  fiscal policy, global financial crisis, global crisis debate, stimulus, multiplier

No ordinary recession

Axel Leijonhufvud 13 February 2009

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This is not an ordinary recession that differs from other recent episodes simply by being somewhat more severe. It differs in kind.

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Topics:  Global crisis

Tags:  recession, stimulus, deleverage

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