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Who believes in fiscal and monetary stimulus?

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  • David, Amdur

Abstract

Does the public believe that fiscal and monetary stimulus reduce unemployment? I present survey evidence on this question from a random sample of Pennsylvania residents. Few respondents express a consistently Keynesian view of fiscal and monetary stimulus. In fact, the typical respondent believes that an increase in government spending makes unemployment worse. Views on monetary stimulus depend on how the question is framed. The typical respondent believes that Fed money creation worsens unemployment while a Fed interest rate cut improves it. I show how opinion varies by political party, educational attainment, income, and other demographic characteristics. Favorable opinions about government spending are strongly associated with support for President Obama's economic policies, even after controlling for political party and for respondents' opinions about the current state and trajectory of the economy.

Suggested Citation

  • David, Amdur, 2012. "Who believes in fiscal and monetary stimulus?," MPRA Paper 40149, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40149
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    File URL: https://mpra.ub.uni-muenchen.de/40158/1/MPRA_paper_40158.pdf
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    References listed on IDEAS

    as
    1. Author-Name: Alan S. Blinder & Alan B. Krueger, 2004. "What Does the Public Know about Economic Policy, and How Does It Know It?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 327-397.
    2. Walstad, William B. & Rebeck, Ken, 2002. "Assessing the economic knowledge and economic opinions of adults," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(5), pages 921-935.
    3. Bryan Caplan, 2002. "Systematically Biased Beliefs About Economics: Robust Evidence of Judgemental Anomalies from the Survey of Americans and Economists on the Economy," Economic Journal, Royal Economic Society, vol. 112(479), pages 433-458, April.
    4. Dan Fuller & Doris Geide-Stevenson, 2007. "Consensus on Economic Issues: A Survey of Republicans, Democrats, and Economists," Eastern Economic Journal, Eastern Economic Association, vol. 33(1), pages 81-94, Winter.
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    Cited by:

    1. Lester Hadsell & Michael McAvoy & Jaime McGovern, 2013. "Promoting Economic Literacy and Self-Awareness Through An Understanding Of Economic Ideology," New York Economic Review, New York State Economics Association (NYSEA), vol. 44(1), pages 54-76.

    More about this item

    Keywords

    Opinion survey; fiscal stimulus; monetary stimulus; unemployment; Keynesian economics;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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