Estimated Macroeconomic Effects of the U.S. Stimulus Bill

14 Pages Posted: 15 Sep 2010

See all articles by Ray C. Fair

Ray C. Fair

Yale University - Cowles Foundation; Yale School of Management - International Center for Finance

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Abstract

This paper uses a multicountry macroeconometric model to estimate the macroeconomic effects of the U.S. stimulus bill passed in February 2009. The analysis has the advantage of taking into account many endogenous effects. Real U.S. output is estimated to be $554 billion larger when summed over the 12-year period 2009:1–2020:4 (0.29% of the total sum of output). The average number of jobs is 509 thousand larger (0.37%). There is some redistribution of output and employment away from 2012 to 2015. At the end of 2020, the federal government debt is larger by $637 billion in real terms (the debt/GDP ratio is larger by 3.19 percentage points), which may increase the risk of negative asset-market reactions.

JEL Classification: E17

Suggested Citation

Fair, Ray C., Estimated Macroeconomic Effects of the U.S. Stimulus Bill. Contemporary Economic Policy, Vol. 28, Issue 4, pp. 439-452, October 2010. Available at SSRN: https://ssrn.com/abstract=1677094 or http://dx.doi.org/10.1111/j.1465-7287.2010.00221.x

Ray C. Fair (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
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203-432-3715 (Phone)
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HOME PAGE: http://fairmodel.econ.yale.edu

Yale School of Management - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States
203-432-3715 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://fairmodel.econ.yale.edu

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