IDEAS home Printed from
   My bibliography  Save this paper

Stimulus Without Debt



    () (Department of Economics,University of Delaware)


A sobering lesson from the Great Recession is that widespread worry about government debt generates strong political resistance to enacting a fiscal stimulus large enough to overcome a severe recession. Fortunately there is a way to implement fiscal stimulus without increasing government debt. The purpose of this article is to explain the stimulus-without-debt plan, defend it, and urge Keynesian economists to advocate it in today’s weak recovery and in future recessions. Under the plan, in a severe recession, fiscal stimulus enacted by Congress should be accompanied by a “dual-mandate transfer” from the Federal Reserve to the U.S. Treasury of the same magnitude so that the Treasury does not have to borrow to finance the fiscal stimulus. This article contrasts this stimulus-without-debt plan with alternative stimulus plans.

Suggested Citation

  • Laurence Seidman, 2014. "Stimulus Without Debt," Working Papers 14-01, University of Delaware, Department of Economics.
  • Handle: RePEc:dlw:wpaper:14-01.

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Valerie A. Ramey, 2011. "Identifying Government Spending Shocks: It's all in the Timing," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 1-50.
    2. 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.
    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. Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, vol. 103(6), pages 2530-2553, October.
    5. Laurence Seidman, 2011. "Great Depression II," Challenge, Taylor & Francis Journals, vol. 54(1), pages 32-53.
    6. Laurence Seidman, 2012. "Keynesian stimulus versus classical austerity," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(0), pages 77-92.
    7. Laurence Seidman, 2011. "Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?," Working Papers 11-11, University of Delaware, Department of Economics.
    Full references (including those not matched with items on IDEAS)


    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. A debt-free stimulus?
      by Economic Logician in Economic Logic on 2014-01-31 20:58:00


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Seidman, Laurence & Lewis, Kenneth, 2015. "Stimulus without debt in a severe recession," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 945-960.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dlw:wpaper:14-01.. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Saul Hoffman). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.