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Did the American Recovery and Reinvestment Act Help Counties Most Affected by the Great Recession?

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  • Mario J Crucini
  • Nam T Vu

Abstract

One of the statements of purpose of the American Recovery and Reinvestment Act (ARRA) was “to assist those most impacted by the recession.” To consider this facet, the ARRA is assessed along this dimension using the concept of risk-sharing. We estimate a trend-stationary autoregressive model of county-level wage income dynamics with each county subject to an idiosyncratic shock and a common shock (with county-specific factor loading). These shocks are used to estimate a redistributive fiscal policy function. The fiscal-offset is 33.6% for the common shock and 6.64% for the county-specific shock. Both of these fiscal policy parameters are statistically and economically significant.

Suggested Citation

  • Mario J Crucini & Nam T Vu, 2019. "Did the American Recovery and Reinvestment Act Help Counties Most Affected by the Great Recession?," CAMA Working Papers 2019-57, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2019-57
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    Cited by:

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    2. Huynh, Anh Ngoc Quang, 2025. "Research and development fund allocation, high technology law, and firm investment choices," Economics Letters, Elsevier, vol. 253(C).
    3. Luu, Thu Thanh & Pham, Duong Phuong Thao, 2024. "Regional bombs and firm investment decisions: Evidence from the Vietnam War," Economics Letters, Elsevier, vol. 244(C).

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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