Working Paper: NBER ID: w14684
Authors: Martin S. Feldstein
Abstract: As recently as two years ago there was a widespread consensus among economists that fiscal policy is not useful as a countercyclical instrument. Now governments in Washington and around the world are developing massive fiscal stimulus packages, supported by a wide range of economists in universities, governments, and businesses. \n \nWhy has this change occurred? What are the principles for designing a potentially useful fiscal stimulus? And what will happen if the current fiscal stimulus fails?
Keywords: No keywords provided
JEL Codes: E6; E62; H3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government spending (H59) | economic activity (E20) |
| government spending (H59) | aggregate demand (E00) |
| crowding out, increased national debt (E62) | economic activity (E20) |
| excessive leverage, dysfunctional credit market (F65) | fiscal policy effectiveness (E62) |
| one-time tax rebate (H23) | consumer spending (D12) |
| increased government spending (H59) | economic recovery (E65) |
| fiscal policy actions (E62) | economic outcomes (F61) |