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Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?

Author

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  • Laurence Seidman

    (Department of Economics,University of Delaware)

Abstract

What have we learned from the Great Recession about Keynesian fiscal stimulus? This article contains five sections that develop the following five points: (1) There is confusion about what constitutes Keynesian fiscal stimulus; (2) Economists are deeply divided about fiscal stimulus; (3) A fundamental error has been committed by an influential economist in estimating the recession magnitude of the Keynesian multiplier; (4) A fundamental error has been committed by two influential economists in their analysis of the impact of the 2008 tax rebate on consumption spending; (5) Advocates of fiscal stimulus in recession should support keeping government debt low in prosperity.

Suggested Citation

  • Laurence Seidman, 2011. "Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?," Working Papers 11-11, University of Delaware, Department of Economics.
    • Handle: RePEc:dlw:wpaper:11-11.
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    File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2011/UDWP2011-11.pdf
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    References listed on IDEAS

    as
    1. Nicholas S. Souleles & Jonathan A. Parker & David S. Johnson, 2006. "Household Expenditure and the Income Tax Rebates of 2001," American Economic Review, American Economic Association, vol. 96(5), pages 1589-1610, December.
    2. Laurence Seidman, 2011. "Great Depression II," Challenge, Taylor & Francis Journals, vol. 54(1), pages 32-53.
    3. Kenneth Lewis & Laurence Seidman, 2011. "Did the 2008 rebate fail? a response to Taylor and Feldstein," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(2), pages 183-204.
    4. 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.
    5. John B. Taylor, 2009. "The Lack of an Empirical Rationale for a Revival of Discretionary Fiscal Policy," American Economic Review, American Economic Association, vol. 99(2), pages 550-555, May.
    6. Martin Feldstein, 2009. "Rethinking the Role of Fiscal Policy," American Economic Review, American Economic Association, vol. 99(2), pages 556-559, May.
    7. Seidman Laurence, 2010. "Reducing Future Deficits While Stimulating Today's Economy," The Economists' Voice, De Gruyter, vol. 7(3), pages 1-5, August.
    8. Cochrane, John H., 2011. "Understanding policy in the great recession: Some unpleasant fiscal arithmetic," European Economic Review, Elsevier, vol. 55(1), pages 2-30, January.
    9. Laurence Seidman, 2001. "Reviving Fiscal Policy," Challenge, Taylor & Francis Journals, vol. 44(3), pages 17-42.
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    Cited by:

    1. Laurence Seidman, 2013. "Stimulus Without Debt," Challenge, Taylor & Francis Journals, vol. 56(6), pages 38-59.

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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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