Third,Īrmed with the information from our two estimation steps, we evaluate the impact of the budget, from both automatic stabilizers and discretionary actions, on economic activity over the past two years. We also consider the multiplier impacts of these actions. In contrast, we find that state and local policy actions have been somewhat pro-cyclical, probably reflecting constitutional restrictions on general fund budget balances. ![]() Stimulative after a business cycle peak than before the peak. We find that federal policy actions are somewhat counter-cyclical: expenditures and tax actions are typically more Second, we provide measures of discretionary fiscal policy actions at the federal and state and local levels. The automatic stabilizers in place and without the automatic stabilizers. We then examine the response of the economy to these automatic stabilizers using the FRB/US model by comparing the response to aggregate demand shocks under two scenarios: with For state and local governments, the deficit increases by about 0.1 percent of GDP. For the federal government, the deficit increases about 0.35 percent of GDP for each 1 percentage point deviation ofĪctual GDP relative to potential GDP. First, we provide measures of the effects of the automatic stabilizers on budget outcomes at the federal and state and local levels. This paper examines fiscal policy at both the federal and state and local level and looks at the effects of both automatic stabilizers and discretionary fiscalĪctions. Finally, we evaluate the impact of the budget, from both automatic stabilizers and discretionary actions, on economic activity in 20.įiscal policy has been a key policy tool in addressing the aggregate demand consequences of the financial crisis in the United States. We find that federal policy actions are somewhatĬounter-cyclical while state and local policy actions have been somewhat pro-cyclical. The response to aggregate demand shocks under two scenarios: with the automatic stabilizers in place and without the automatic stabilizers. We then examine the response of the economy to the automatic stabilizers using the FRB/US model by comparing For the federal government, the deficit increasesĪbout 0.35 percent of GDP for each 1 percentage point deviation of actual GDP relative to potential GDP. ![]() First, we provide measures of the effects of automatic stabilizers on budget outcomes at the federal and state and local levels. We examine the effects of the economy on the government budget as well as the effects of the budget on the economy.
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