Evaluation of the Efficiency of Stimulus Measures

London Journal of Research in Humanities and Social Sciences
Volume | Issue | Compilation
Authored by Rafael Yanushevsky , Camilla Yanushevsky
Classification: JEL CODE: C20, C60, O40
Keywords: debt, debt to GDP ratio, debt dynamics, government spending.
Language: English

The impact of expansionary fiscal policy intended to increase economic growth by using stimulus packages is analyzed by considering the debt to GDP ratio dynamics model. It is shown that for the data characterizing the current state of the U.S. economy the government investment in infrastructure and tax cuts alone cannot decrease the debt to GDP ratio. The paper contributes to the on-going fiscal policy debate whether government investment in infrastructure and tax cuts are an effective approach to boost the economy.


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