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Does Fiscal Stimulus Cause Too Much Debt?


  • Laurence S Seidman
  • Kenneth A Lewis


This study distinguishes between temporary fiscal stimulus to combat a recession and two other debt-raising policies: financial bailouts and spending on Medicare, Medicaid, and Social Security. Two striking conclusions emerge from our simulations of the impact of a temporary fiscal stimulus on the economy. First, the fiscal stimulus effectively mitigates the recession. Second, debt as a percentage of GDP is only slightly greater with the fiscal stimulus than it would be without the stimulus.

Suggested Citation

  • Laurence S Seidman & Kenneth A Lewis, 2009. "Does Fiscal Stimulus Cause Too Much Debt?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 44(4), pages 201-205, October.
  • Handle: RePEc:pal:buseco:v:44:y:2009:i:4:p:201-205

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    References listed on IDEAS

    1. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    2. Ana Aizcorbe & Samuel Kortum, 2005. "Moore's Law and the Semiconductor Industry: A Vintage Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 603-630, December.
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    Cited by:

    1. Laurence Seidman, 2011. "Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?," Working Papers 11-11, University of Delaware, Department of Economics.

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