NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

"Getting the Biggest Bang for the Buck in Fiscal Policy"

Miles S. Kimball

NBER Working Paper No. 18142
Issued in June 2012
NBER Program(s):Economic Fluctuations and Growth, International Finance and Macroeconomics, Monetary Economics, Public Economics

In ranking fiscal stimulus programs, it is useful to focus on the ratio of extra aggregate demand to extra national debt that results. This note argues that (because of repayment after the end of a recession) "national lines of credit"-that is, government-issued credit cards with countercyclical credit limits and favorable interest rates--would generate a higher ratio of extra aggregate demand to extra national debt than tax rebates. Because it involves government loans that are anticipated in advance to involve some losses and therefore involve a fiscal cost even after efforts to minimize losses, such a policy lies between traditional monetary policy and traditional fiscal policy.

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Document Object Identifier (DOI): 10.3386/w18142

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