Did the American Recovery and Reinvestment Act Help Counties Most Affected by the Great Recession?

65 Pages Posted: 12 Aug 2019

See all articles by Mario J. Crucini

Mario J. Crucini

Vanderbilt University - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Nam T. Vu

Miami University of Ohio - Department of Economics

Date Written: July 30, 2019

Abstract

One of the statements of purpose of the American Recovery and Reinvestment Act (ARRA) was “to assist those most impacted by the recession.” To consider this facet, the ARRA is assessed along this dimension using the concept of risk-sharing. We estimate a trend-stationary autoregressive model of county-level wage income dynamics with each county subject to an idiosyncratic shock and a common shock (with county-specific factor loading). These shocks are used to estimate a redistributive fiscal policy function. The fiscal-offset is 33.6% for the common shock and 6.64% for the county-specific shock. Both of these fiscal policy parameters are statistically and economically significant.

Keywords: the American Recovery and Reinvestment Act, fiscal stimulus, risk-sharing, county-level wage income, income dynamics

JEL Classification: E0, E6

Suggested Citation

Crucini, Mario J. and Vu, Nam T., Did the American Recovery and Reinvestment Act Help Counties Most Affected by the Great Recession? (July 30, 2019). CAMA Working Paper No. 57/2019. Available at SSRN: https://ssrn.com/abstract=3435919 or http://dx.doi.org/10.2139/ssrn.3435919

Mario J. Crucini (Contact Author)

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
(615) 322-7357 (Phone)
(615) 343-8495 (Fax)

HOME PAGE: http://my.vanderbilt.edu/mariocrucini/about-me/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nam T. Vu

Miami University of Ohio - Department of Economics ( email )

208 Laws Hall
Oxford, OH 45056
United States

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