"Getting the Biggest Bang for the Buck in Fiscal Policy"

10 Pages Posted: 16 Jun 2012 Last revised: 2 Aug 2012

See all articles by Miles S. Kimball

Miles S. Kimball

University of Michigan at Ann Arbor - Department of Economics; University of Colorado Boulder; Center for Economic and Social Research, USC; National Bureau of Economic Research (NBER)

Date Written: June 2012

Abstract

In ranking fiscal stimulus programs, it is useful to focus on the ratio of extra aggregate demand to extra national debt that results. This note argues that (because of repayment after the end of a recession) "national lines of credit"-that is, government-issued credit cards with countercyclical credit limits and favorable interest rates--would generate a higher ratio of extra aggregate demand to extra national debt than tax rebates. Because it involves government loans that are anticipated in advance to involve some losses and therefore involve a fiscal cost even after efforts to minimize losses, such a policy lies between traditional monetary policy and traditional fiscal policy.

Suggested Citation

Kimball, Miles S., "Getting the Biggest Bang for the Buck in Fiscal Policy" (June 2012). NBER Working Paper No. w18142. Available at SSRN: https://ssrn.com/abstract=2085130

Miles S. Kimball (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

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University of Colorado Boulder ( email )

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HOME PAGE: http://www.colorado.edu/Economics/people/faculty/kimball.html

Center for Economic and Social Research, USC ( email )

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National Bureau of Economic Research (NBER)

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