Gerald Carlino, Thorsten Drautzburg, Robert Inman, Nicholas Zarra, 07 April 2021

The allocation of COVID-19 assistance under the American Rescue Plan has proven to be a point of significant partisan conflict between the Democratic administration and Republican governors. Motivated by partisan conflicts in the passage and implementation of the American Recovery and Reinvestment Act, this column suggests that the resolution of these disagreements will have significant consequences for the overall impact of the American Rescue Plan on the aggregate economy.

Pascal Michaillat, Emmanuel Saez, 13 May 2019

Academics and policymakers alike have debated how to structure an optimal stimulus package since the Great Recession. This column revisits the arguments related to the size of the multiplier and the usefulness of public spending, and offers a blueprint for future stimulus packages. It finds that the relationship between the multiplier and stimulus spending is hump-shaped, and that a well-designed stimulus package should depend on the usefulness of public expenditure. The output multiplier is not a robust statistic to use, and instead the ‘unemployment multiplier’ should be used. 

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