Abstract
Facing the most severe recession since the 1930s, and probably the longest as well, the U.S. government has adopted an aggressive countercyclical fiscal policy stance, beginning with the "Economic Stimulus Act of 2008" in February of that year, shortly after the recession's designated starting date, and followed one year later by the much larger "American Recovery and Reinvestment Tax Act of 2009." These two bills, adopted under different presidents, both contained temporary tax rebates for households and temporary investment incentives for firms, indicating at least limited bipartisan acceptance of these approaches to countercyclical stimulus.
Introduction
Facing the most severe recession since the 1930s, and probably the longest as well, the U.S. government has adopted an aggressive countercyclical fiscal policy stance, beginning with the "Economic Stimulus Act of 2008" in February of that year, shortly after the recession's designated starting date, and followed one year later by the much larger "American Recovery and Reinvestment Tax Act of 2009." These two bills, adopted under different presidents, both contained temporary tax rebates for households and temporary investment incentives for firms, indicating at least limited bipartisan acceptance of these approaches to countercyclical stimulus. The 2009 act, amounting to 5.5 percent of GDP, also included a variety of government spending provisions, most notably the funding of "shovel-ready" infrastructure projects and aid to state governments. And, even as signs are appearing that the recession's end is near or already past, calls continue for the passage of yet another stimulus bill in 2009. Almost all OECD countries have introduced stimulus measures, with the packages averaging 2.5 percent of GDP across the OECD.
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