~http://blogs.wsj.com/economics/2014/03/20/stimulus-in-2009-not-politically-driven-or-particularly-efficient/
~http://www.brookings.edu/about/projects/bpea/papers/2014/arra-political-economy-discretionary-spending#recent/
A postmortem on the 2009 Stimulus bill, which dispensed nearly $800 billion into the domestic economy, was released by researchers from economists Christopher Boone of Columbia University, Arindrajit Dube of the University of Massachusetts Amherst and Ethan Kaplan of the University of Maryland.
They found that, thankfully, the money was not dispensed in any politically-advantageous way for the Democrats, then the majority party in the House of Representatives. Perhaps more worrisome was the inefficiency of where the money was spent: “There was no significant or consistent relationship between the amount spent and a number of different measures of local unemployment, including the unemployment rate in January 2009, the change in the unemployment rate between 2007 and 2009.” Furthermore, “We find no relationship between extent of award and measures of the severity of the downturn in the local economy, or the pace at which funds were spent,” they write. “We do find more funds flowing to areas with more economic activity and a greater incidence of poverty.” Ironically, “The good news is that political constraints appear to have made fiscal policy more politically neutral; the bad news is those constraints may have also reduced the counter-cyclical efficacy.”
If you want, you can watch the brookings video to learn more about the study. Tell me what you think about the results you found. Are you surprised?
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