Does Fiscal Policy Reduce Unemployment? Evidence from Pork-Barrel Spending
9 Pages Posted: 8 Jun 2009
Date Written: June 6, 2009
Studies of the effect of government spending on unemployment are potentially confounded by reverse causality. To address the endogeneity problem, we exploit variation in a pork-barrel road-building program, and find that higher government expenditure on road-building substantially reduces local unemployment.
Keywords: fiscal policy, unemployment, partisanship
JEL Classification: E24, E62, H30, H54
Suggested Citation: Suggested Citation