Putting the stimulus bill in perspective
If you're interested in an extremely detailed walkthrough of the various camps and models that dominate the economics profession's debates over fiscal stimulus, this paper (pdf) by Alan Auerbach, William Gale, and Benjamin Harris is worth your time. And if you're more of a casual participant in the Great Stimulus Debate, these two paragraphs putting America's stimulus into international and historical context are worth committing to memory:
Amounting to 5.5 percent of current-year GDP, albeit spread over several years, the American Recovery and Restoration Act was the largest stimulus package in modern U.S. economic history. Romer (2009) notes that the largest stimulus provision during the Great Depression amounted to 1.5 percent of GDP and was followed one year later by deficit reduction policies.
By way of comparison, almost all OECD countries have introduced stimulus measures, with the packages averaging 2.5 percent of GDP. Automatic stabilizers, however, are substantially smaller in the United States than in most other OECD countries. As a result, while the United States had the largest discretionary stimulus package, the combined effects of its automatic and discretionary policies on the government’s budget for 2008–10 were the sixth largest as a share of GDP in the OECD (OECD, 2009).
The OECD paper (pdf) they mention includes a nice graph showing the size of various stimulus responses across the developed world:
That graph is from 2009. I'd love to see an updated version.
| December 28, 2010; 2:30 PM ET
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