A Cup Runneth Over
Fiscal Policy Spillovers from the 2009 Recovery Act
Bibliographic Data
| ID | 9703000 |
|---|---|
| Authors | Bill Dupor (0000-0002-2407-2792, Federal Reserve Bank of St. Louis, corresponding author), Peter B McCrory (University of California, Berkeley), Peter McCrory (University of California, Berkeley) |
| Year | 2018 |
| Volume | 128 |
| Issue | 611 |
| Pages | 1476-1508 |
| Publication date | 2018-06-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/ecoj.12475 |
| OpenAlex | W2345937219 |
| Language | EN |
| Citations received | 5 |
| References cited | 7 |
This paper studies the effects of interregional spillovers from the government spending component of the American Recovery and Reinvestment Act of 2009 (the Recovery Act). Using cross-county Census Journey to Work commuting data, we cluster U.S. counties into local labor markets, each of which we further partition into two subregions. We then compare differential labor market outcomes and Recovery Act spending at the regional and subregional levels using instrumental variables. Our instrument is the sum of spending by federal agencies not instructed to allocate Recovery Act funds according to the severity of local downturns. Among pairs of subregions, we find evidence of fiscal policy spillovers. According to our benchmark specification, $1 of Recovery Act spending in a subregion increases its own wage bill by $0.64 and increases the wage bill in its neighboring subregion by $0.50 during the rst two years following the act's passage. We find similar spillover effects when we replace the wage bill with employment as our measure of economic activity. The spillover effect occurs in the service sector, whereas the direct effect occurs in both the services and goods producing sector. Also, we estimate cross-sectional regressions at various levels of aggregation. The estimated effect of stimulus spending increases with the level of aggregation, as greater aggregation subsumes geographic spillovers into the own-region effect of spending
Differential (mechanical device · Economics · Economy · Fiscal policy · Labour economics · Macroeconomics · Monetary economics · Service (business · Spillover effect · Wage · Fiscal Policy and Economic Growth · Global trade and economics · Politics, Economics, and Education Policy
| Unique citing works | 5 |
|---|---|
| Citations per year | 1 |
| Citation span | 2021 - 2026 (6) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 5 |