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Crowding Out Fiscal Stimulus

Testing the Effectiveness of US Government Stimulus Programs

  • Book
  • © 2017

Overview

Authors:
  1. John J. Heim

    1. University at Albany-SUNY, Albany, USA

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  • Addresses empirically the effectiveness of government economic stimulus programs

  • Exhaustively applies tests to different models and time periods

  • Tests effectiveness during recessions and nonrecession periods

  • Favors testing pro-stimulus Keynesian models to avoid biased interpretations

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Table of contents (16 chapters)

  1. Front Matter

    Pages i-xxi
    Download chapter PDF

  2. Introduction

    • John J. Heim
    Pages 1-3

  3. Theory of Crowd Out

    • John J. Heim
    Pages 5-10

  4. Literature Review

    • John J. Heim
    Pages 11-32

  5. Methodology

    • John J. Heim
    Pages 33-41

  6. Test Results: Consumer Spending and Borrowing Models (One-Variable Deficit)

    • John J. Heim
    Pages 43-90

  7. Test Results: Investment Spending and Borrowing Models (One-Variable Deficit)

    • John J. Heim
    Pages 91-132

  8. Test Results: Consumer Spending and Borrowing Models (Two-Variable Deficit)

    • John J. Heim
    Pages 133-149

  9. Test Results: Investment Spending and Borrowing Models (Two-Variable Deficit)

    • John J. Heim
    Pages 151-171

  10. Are Findings Of One- and Two-Variable Deficit Models Consistent?

    • John J. Heim
    Pages 173-174

  11. Effects of Stimulus Programs on GDP, Net of Crowd Out Effects

    • John J. Heim
    Pages 175-197

  12. Dynamic Effects

    • John J. Heim
    Pages 199-208

  13. Alternatives to Financing Stimulus Programs with Domestic Borrowing

    • John J. Heim
    Pages 209-214

  14. A Note on the Disposable Income Variable Used in Consumption Models

    • John J. Heim
    Pages 215-218

  15. Do Crowd Out Effects Differ in Recession and Non-recession Periods?

    • John J. Heim
    Pages 219-237

  16. Does the Gale and Orszag Hypothesis Explain Tax and Spending Effects Better in Recessions Than Non-recession Periods?

    • John J. Heim
    Pages 239-249

  17. Summary of Findings and Conclusions

    • John J. Heim
    Pages 251-261

  18. Back Matter

    Pages 263-272
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Keywords

About this book

This book presents overwhelming evidence that US government stimulus programs over the past fifty years have not worked. Using the best and most modern econometric testing models, it applies 228 separate hard science tests to examine the effects of different stimulus models that should, in theory, have shown positive results. By testing every possible alternative interpretation, starting with one time period and then retesting in three additional time periods, this definitive study finds that even when favoring pro-stimulus Keynesian models, public financing through government tax cuts and spending increase programs is more likely to drive down - or "crowd out" - as much private sector spending as it stimulates in the public sector.

Authors and Affiliations

  • University at Albany-SUNY, Albany, USA

    John J. Heim

About the author

John J. Heim is Visiting Professor at University of Albany-SUNY, and retired Clinical Professor of Economics at Rensselaer Polytechnic Institute, both in New York, USA.

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