NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Targeted Transfers and the Fiscal Response to the Great Recession

Hyunseung Oh, Ricardo Reis

NBER Working Paper No. 16775
Issued in February 2011
NBER Program(s):   EFG   ME   PE

Between 2007 and 2009, government expenditures increased rapidly across the OECD countries. While economic research on the impact of government purchases has flourished, in the data, about three quarters of the increase in expenditures in the United States (and more in other countries) was in government transfers. We document this fact, and show that the increase in U.S. spending on retirement, disability, and medical care has been as high as the increase in government purchases. We argue that future research should focus on the positive impact of transfers. Towards this, we present a model in which there is no representative agent and Ricardian equivalence does not hold because of uncertainty, imperfect credit markets, and nominal rigidities. Targeted lump-sum transfers are expansionary both because of a neoclassical wealth effect and because of a Keynesian aggregate demand effect.

download in pdf format
   (726 K)

email paper

This paper is available as PDF (726 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Oh, Hyunseung & Reis, Ricardo, 2012. "Targeted transfers and the fiscal response to the great recession," Journal of Monetary Economics, Elsevier, vol. 59(S), pages S50-S64.

Users who downloaded this paper also downloaded these:
Aizenman and Pasricha w16779 Net Fiscal Stimulus During the Great Recession
Feyrer and Sacerdote w16759 Did the Stimulus Stimulate? Real Time Estimates of the Effects of the American Recovery and Reinvestment Act
Cogan and Taylor w16505 What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package
Parker w17240 On Measuring the Effects of Fiscal Policy in Recessions
Reis w11746 A Dynamic Measure of Inflation
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us