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Fiscal Spending Jobs Multipliers: Evidence from the 2009 American Recovery and Reinvestment Act

  • Daniel J. Wilson

This paper estimates the "jobs multiplier" of fiscal stimulus spending using the state-level allocations of federal stimulus funds from the American Recovery and Reinvestment Act (ARRA) of 2009. Because the level and timing of stimulus funds that a state receives was potentially endogenous, I exploit the fact that most of these funds were allocated according to exogenous formulary allocation factors such as the number of federal highway miles in a state or its youth share of population. Cross-state IV results indicate that ARRA spending in its first year yielded about eight jobs per million dollars spent, or $125,000 per job. (JEL E24, E62, H72, H75, R23)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.3.251
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File URL: http://www.aeaweb.org/aej/pol/data/2011-0102_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 4 (2012)
Issue (Month): 3 (August)
Pages: 251-82

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Handle: RePEc:aea:aejpol:v:4:y:2012:i:3:p:251-82
Note: DOI: 10.1257/pol.4.3.251
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  1. Sylvain Leduc & Daniel Wilson, 2012. "Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment," NBER Chapters, in: NBER Macroeconomics Annual 2012, Volume 27, pages 89-142 National Bureau of Economic Research, Inc.
  2. Olivier Blanchard & Roberto Perotti, 1999. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," NBER Working Papers 7269, National Bureau of Economic Research, Inc.
  3. Clemens, Jeffrey & Miran, Stephen, 2010. "The effects of state budget cuts on employment and income," MPRA Paper 38715, University Library of Munich, Germany.
  4. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
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