Crowding Out Fiscal Stimulus

This book presents overwhelming evidence that US government stimulus programs over the past fifty years have not worked. Using the best and most modern econometric testing models, it applies 228 separate hard science tests to examine the effects of different stimulus models that should, in theory, have shown positive results. By testing every possible alternative interpretation, starting with one time period and then retesting in three additional time periods, this definitive study finds that even when favoring pro-stimulus Keynesian models, public financing through government tax cuts and spending increase programs is more likely to drive down - or "crowd out" - as much private sector spending as it stimulates in the public sector.

Addresses empirically the effectiveness of government economic stimulus programs Exhaustively applies tests to different models and time periods Tests effectiveness during recessions and nonrecession periods Favors testing pro-stimulus Keynesian models to avoid biased interpretations

Autorentext
John J. Heim is Visiting Professor at University of Albany-SUNY, and retired Clinical Professor of Economics at Rensselaer Polytechnic Institute, both in New York, USA.

Inhalt

1. Introduction.- 2. Theory of Crowd Out.- 3. Literature Review.- 4. Methodology.- 5. Test Results: Consumer Spending and Borrowing Models (1 Variable Deficit).- 6. Test Results: Investment Spending and Borrowing Models (1 Variable Deficit).- 7. Test Results: Consumer Spending and Borrowing Models (2 Variable Deficit).- 8. Test Results: Investment Spending and Borrowing Models (2 Variable Deficit).- 9. Are Findings of 1 and 2 Variable Consumer and Investment Deficit Models Consistent?.- 10. Effects of Stimulus Programs on GDP, Net of Crowd Out Effects.- 11. Dynamic Effects.- 12. Alternatives to Financing Stimulus Programs with Domestic Borrowing.- 13. A Note on the Disposable Income Variable in the Consumption Models.- 14. Do Crowd Out Effects Differ in Recessions and Nonrecession Periods?.- 15. Does the Gale/Orszag Hypothesis Explain Tax and Spending Effects Better in Recession than Nonrecession Periods?.- 16. Summary of Findings and Conclusions.