While objections can be (and have been) raised, the U.S. government’s multifaceted macroeconomic policy responses to the financial crisis after September 2008 appear to have been quite effective. Yet, politically, they are more reviled than admired. The paradox is that economic success—in the sense of averting much worse outcomes—turned into political failure. This article asks why.
AuerbachAlan J.GorodnichenkoYuriy. 2012. Measuring the output responses to fiscal policy. American Economic Journal: Economic Policy4 (2): 1–27.
2.
BernankeBen S.21July2009. Semiannual monetary policy report to the Congress. Testimony before the Committee on Financial Services, U.S. House of Representatives. Washington, DC. Available from www.federalreserve.gov.
3.
BlinderAlan S.2013. After the music stopped: The financial crisis, the response, and the work ahead. New York, NY: Penguin Press.
4.
BlinderAlan S.Holtz-EakinDouglas. 1984. Public opinion and the balanced budget. American Economic Review74 (2): 144–49.
5.
BlinderAlan S.ZandiMark M.2010. How the Great Recession was brought to an end. Moody’s Analytics. Available from www.economy.com.
6.
CassidyJohn. 15March2010. No credit. The New Yorker, 26–30. Available from www.newyorker.com.
7.
CochraneJohn H.2009–2010. Lessons from the financial crisis. Regulation32 (4): 34–37.
8.
CoganJohn F.CwikTobiasTaylorJohn B.WielandVolker. 2010. New Keynesian versus old Keynesian government spending multipliers. Journal of Economic Dynamics and Control34 (3): 281–95.
9.
CoganJohn F.TaylorJohn B.WielandVolker. 17September2009. The stimulus didn’t work. The Wall Street Journal.
10.
Congressional Budget Office (CBO). 2011. Estimated impact of the American Recovery and Reinvestment Act on employment and economic output from July 2011 through September 2011. Washington, DC: U.S. Government Printing Office. Available from www.cbo.gov/publication/42715.
11.
Congressional Budget Office (CBO). 2012. Actual ARRA spending over the 2009–2011 period quite close to CBO’s original estimate. Washington, DC: U.S. Government Printing Office. Available from www.cbo.gov/publication/42682.
12.
FazzariSteven M.MorleyJames C.PanovskaIrina. 2012. State-dependent effects of fiscal policy. Working Paper, Washington University, Saint Louis, MO. Available from www.irinapanovska.com.
13.
FeyrerJamesSacerdoteBruce. 2011. Did the stimulus stimulate? Real time estimates of the effects of the American Recovery and Reinvestment Act. National Bureau of Economic Research Working Paper 16759, Cambridge, MA.
14.
GreenspanAlan. 2011. Activism. International Finance14 (1): 165–82.
15.
JonesJeffrey M.2011. Americans want Congress, Obama to tackle economic issues. Gallup Politics. Available from www.gallup.com.
16.
KahnemanDaniel. 2011. Thinking, fast and slow. New York, NY: Farrar, Straus and Giroux.
17.
MeltzerAllan H.2009. Policy principles: Lessons from the Fed’s past. In The road ahead for the Fed, eds. CiorciariJohn D.TaylorJohn B., 13–32. Stanford, CA: Hoover Institution Press.
18.
OwyangMichael T.RameyValerie A.ZubairySarah. 2013. Are government spending multipliers greater during periods of slack? Evidence from 20th century historical data. Paper presented at the annual meeting of the American Economic Association, 4–6 January, San Diego, CA.
19.
ParkerJonathan A.SoulelesNicholas S.JohnsonDavid S.McClellandRobert. 2011. Consumer spending and the economic stimulus payments of 2008. National Bureau of Economic Research Working Paper 16684, Cambridge, MA.
20.
PaulRon. 2009. End the Fed. New York, NY: Grand Central Publishing.
21.
RameyValerie A.2011. Can government purchases stimulate the economy?Journal of Economic Literature49 (3): 673–85.
22.
SaadLydia. 2009. CDC tops agency ratings; Federal Reserve Board lowest; NASA ratings remain high, while Federal Reserve has lost ground. Gallup Politics. Available from www.gallup.com.
23.
SahmClaudia R.ShapiroMatthew D.SlemrodJoel. 2012. Check in the mail or more in the paycheck: Does the effectiveness of fiscal stimulus depend on how it is delivered?American Economic Journal4 (3): 216–50.
24.
ScheiberNoam. 2012. The escape artists: How Obama’s team fumbled the recovery. New York, NY: Simon & Schuster.
25.
SidesJohn. 2012. Republican primary voters embrace government. No, really. Washington Monthly. Available from www.washingtonmonthly.com.
26.
SteinHerbert. 1969. The fiscal revolution in America. Chicago, IL: University of Chicago Press.
27.
SuskindRon. 2011. Confidence men: Wall Street, Washington, and the education of a president. New York, NY: HarperCollins.
28.
TaylorJohn B.2009. The need for a clear and credible exit strategy. In The road ahead for the Fed, eds. CiorciariJohn D.TaylorJohn B., 85–100. Stanford, CA: Hoover Institution Press.
29.
WilsonDaniel J.2012. Fiscal spending jobs multipliers: Evidence from the 2009 American Recovery and Reinvestment Act. American Economic Journal: Economic Policy4 (3): 251–82.
